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Sonae SGPS Interim / Quarterly Report 2006

Nov 24, 2006

1901_10-q_2006-11-24_0e93e131-9a67-41d9-9c41-b04a62f09fdc.pdf

Interim / Quarterly Report

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SONAE, SGPS, SA Sociedade Aberta Head Office: Lugar do Espido - Via Norte - 4471- 909 MAIA Share Capital: Euro 2,000,000,000 Maia Commercial Registry (Nr. 500 273 170) Fiscal Nr. 500 273 170

REPORT AND ACCOUNTS FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2006

(Translation from the Portuguese original)

REPORT OF THE BOARD OF DIRECTORS FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2006

Sonae, SGPS, SA - Sociedade Aberta Lugar do Espido Via Norte Apartado 1011 4471-909 Maia Portugal Share Capital Euro 2 000 000 000.00 Maia Commercial Registry (Nr. 500 273 170) Fiscal Nr. 500 273 170

(Translation from the Portuguese original)

REPORT OF THE BOARD OF DIRECTORS

FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2006

(Unless otherwise stated, the figures presented in this report relate to the first nine months of 2006. The figures shown in brackets are the comparable1 figures for the previous year.)

CONSOLIDATED HIGHLIGHTS

Values in million euro
Economic Indicators 30.09.2006 30.09.2005
Proforma1		 ∆
Turnover 3,157.1 2,950.2 +7%
Operational Cash-Flow (EBITDA) 416.1 345.2 +20.5%
EBITDA margin 13.2% 11.7% +1.5 p.p.
Operational Profit (EBIT) 242.9 187.0 +29.9%
Profit for the period 185.6 155.2 +19.6%
Profit Attributable to Equity Holders of Sonae 122.7 111.3 +10.2%

1 The consolidated profit and loss accounts for the first nine months of 2006 are not directly comparable with the figures for the first nine months of 2005, because of: the spin-off of the Wood Based Panels business (with accounting effects from 1 October 2005), the sale of the Retail operations in Brazil (with accounting effects from 1 December 2005), the change in the method of consolidation of the Shopping Centres business from full to proportionate (following the sale to Grosvenor, on 29 December 2005, of 17.04% of the share capital of Sonae Sierra) and the sale of the shareholding in Imocapital/Gescartão in the first quarter of 2005. 2006 actual figures are compared with 2005 pro-forma figures, which take account of these changes in the consolidation perimeter.

Contributions to Consolidated Profit for the Period

* Includes dividends paid by the Retail and the Shopping Centres businesses.

Values in million euro
Financial Indicators 30.09.2006 31.12.2005 ∆
Total Assets 5,814.8 6,306.7 -7.8%
Total Equity 1,652.7 1,535.4 +7.6%
Net Debt 2,175.9 1,620.1 +34.3%
Annualised2
Interest cover		 7.1 6.1 +16.4%
Net Debt/annualised2
EBITDA		 3.3 1.7 +94.1%

MAIN CORPORATE EVENTS DURING THE PERIOD

Following the announcement made on 22 December 2004, a further 3.92% of ba Vidro was sold for 12 million euro, generating a capital gain of 3.2 million euro.

On 20 April 2006, in an over the counter transaction, Sonae, SGPS, SA acquired, through Sonae Investments BV, 146,625,000 shares (13.3295% of the share capital) of its affiliate Modelo Continente, SGPS, SA, for the sum of 265.8 million euro. The transaction was made under the terms of the Call Option contract signed on 16 November 2004 between Sonae, SGPS, SA and Banco Santander Central Hispano, SA and its affiliated companies. On 6 September 2006, in a similar transaction, Sonae, SGPS, SA and Sonae Investments BV acquired, over the counter, 100,000,000 shares (9.09% of the share capital) of its affiliate Modelo Continente, SGPS, SA for the sum of 183.7 million euro. With this acquisition the call option contract ceased to exist.

On 16 October 2006, following the registration with the Commercial Registration Office of the acquisition of all of the shares in Modelo Continente, SGPS, SA, Sonae became, together with a wholly-owned subsidiary, the holder of 100% of the share capital of Modelo Continente, SGPS, SA.

2 Annualised = Last twelve months.

On 18 October 2006 the notary deed was signed for the share capital increase of Sonaecom, SGPS, SA from 296,526,868 euro to 366,246,868 euro, through the issuance of 69,720,000 new shares, each with a nominal value of 1 euro and with a corresponding total share premium of 275,657,217 euro, subscribed by 093X - Telecomunicações Celulares, SA and Parpública - Participações Públicas, SGPS, SA by means of contribution of their respective shareholdings, including supplementary capital, in Optimus - Telecomunicações, SA.

On 20 October 2006, Sonae Sierra, SGPS, SA signed an agreement for the sale of 50% of the share capital of Sonae Sierra Brazil, BV/Sarl to Developers Diversified, a company listed in the New York Stock Exchange. The transaction price was US\$ 150 million (118.8 million euros using the exchange rate as at 30 September 2006). The gain arising from this transaction is estimated to be circa 16 million euros, at the average exchange rate as at 30 September 2006.

CORPORATE GOVERNANCE

There were no significant changes in the period that deserve mention, and the guidelines set in the 2005 Report of the Board of Directors remain unchanged.

SHARE PERFORMANCE

Up to 29 September 2006, Sonae SGPS's share price increased 16%, compared with a general stock market gain of 20%, as measured by the Portuguese Stock Market Index (PSI-20). As at the date of this report the share price was 1.49 euro.

The highest closing price in the first nine months of the year 2006 was achieved on 24 March at 1.38 euro per share, and the average daily transaction volume was around 9 million shares. Since the end of the period under review, the highest closing price has been 1.50 euro.

OWN SHARES

On 12 May 2006, Sonaecom, SGPS, SA transferred, in an over the counter transaction and in accordance with its Deferred Performance Bonus Plan, 557,574 Sonae, SGPS, SA shares to employees. After this transaction, Sonae, SGPS, SA holds directly or through its affiliated companies 133,418,572 own shares, representing 6.671% of its share capital.

BUSINESS ANALYSIS 3

On 13 December 2005, the Retail business sold the whole of its stake in the Brazilian operations, ceasing activity in that market. Therefore, consolidated figures regarding the first nine months of 2006 and 2005 are not directly comparable.

RETAIL

Values in million euro
9M'06 9M'05 ∆
Turnover 2,197 2,831 -22%
Operational Cash-Flow (EBITDA) 158 191 -17%
EBITDA Margin (% of turnover) 7.2% 6.7% +0.5 p.p.
Profit Attributable to Equity Holders
of Modelo Continente		 89 65 + 24

EBITDA (M.€)

3 The figures included in this section are those from the consolidated financial statements of each business.

Main highlights

  • Turnover amounted to 2,197 million euro (2,831 million euro), representing a 14% increase in the Portuguese market (the Brazilian operations contributed 896 million euro to turnover in the first nine months of 2005). This increase was due to the positive performance of the like for like store portfolio, to the opening of new stores over the last 12 months (over 46 thousand m2 of sales area), and to the acquisition, in February 2006, of control of Star, the travel agency format, which has strengthened the portfolio of non food formats.
  • Consolidated operational cash flow (EBITDA) was 158 million euro (191 million euro), 21 million euro above the cash flow generated in the Portuguese market in the first nine months of 2005 (the contribution of the Brazilian operations in the first nine months of 2005 totalled 54 million euro).
  • Consolidated net profit for the period was 91 million euro (65 million euro), including 12 million euro relating to the price adjustment arising from the due diligence completed in accordance with the agreement for the sale of the Brazilian operations. The consolidated net profit in the first nine months of 2005 also included 29 million euro of non-recurrent profits associated with the sale of 10 stores in the São Paulo area.

SHOPPING CENTRES

Values in million euro
9M'06 9M'05 ∆
Operational Cash-Flow (EBITDA) 111 90 +24%
Direct Profits4 61 47 +28%
Profit Attributable to Equity Holders
of Sonae Sierra		 98 66 +49%
30 Sep'06 31 Dec'05 ∆
NAV5
per share		 42.41 38.9 +9%
Asset gearing6 7 33.1% 31.9% +1.2 p.p.

Total: 1.99 million square metres

4 Direct Profits = Net Profit before Minorities + Deferred Tax – Value created on Investments – Income realised on Properties.

5 NAV – Net Asset Value.

6 Asset Gearing = Net Bank Debt / (Total Assets – Cash and Cash Equivalents and Current Investments).

7 GLA – Gross Lettable Area.

Sonae, SGPS, SA Report of the Board of Directors – Nine Months ended 30 September 2006

Main highlights

  • Consolidated direct income from investments totalled 193 million euro (163 million euro), up 19%, and Operational Cash-Flow (EBITDA) increased by around 24% to 111 million euro (90 million euro). Such improvements were mainly due to additions to the company's portfolio, arising from: (i) the openings, in 2005, of Plaza Éboli, in Madrid, LoureShopping, in Loures, Serra Shopping, in Covilhã, and Mediterranean Cosmos, in Salonika; (ii) opening of Rio Sul, in Seixal, in the first quarter of 2006; (iii) and the acquisition of Valecenter, in Venice (April 2005), Airone, in Padova (April 2005) and Plaza Sul, in São Paulo (November 2005).
  • Consolidated net profit increased 52%, to 155 million euro (102 million euro), and was positively impacted by the acquisitions and openings which occurred in 2005 and 2006, as well as by the increase in the value created in investment properties as a result of an overall decrease in yields in both Portugal and Spain.
  • On 21 March 2006, the company inaugurated a further shopping centre, RioSul Shopping (Seixal, Portugal), representing an investment of 68 million euro and circa 40 thousand m2 of GLA8 .
  • As at the date of this report Sonae Sierra is the owner or co-owner of 40 shopping and leisure centres, with more than 1.6 million m2 of GLA8 .
  • As at 30 September 2006, the company had fourteen new projects under development: in Portugal, Setúbal Retail Park (Setúbal), Lima Retail Park (Viana do Castelo), VIII Avenida (São João da Madeira) and Évora shopping and leisure centre (Évora); in Spain, Plaza Mayor Shopping (Malaga) and El Rosal shopping and leisure center (Ponferrada); in Germany, Alexa (Berlin), 3Do (Dortmund) and Weiterstadt (Frankfurt); in Italy, Freccia Rossa (Brescia), Gli Orsi (Biella) and Le Terrazze (La Spezia); in Greece, Galatsi Olympic Hall (Athens); and in Brazil, Shopping Campo Limpo (São Paulo).

8 GLA – Gross Lettable Area.

TELECOMMUNICATIONS

Values in million euro
9M'06 9M'05 ∆
Turnover 624 620.7 +1%
Operational Cash-Flow (EBITDA) 151.3 124.3 +22%
EBITDA Margin 24.2% 20.0% +4.2 p.p.
Profit Attributable to Equity Holders
of Sonaecom		 27 7 +20
30 Sep'06 31 Dec'05 ∆
Net Debt 349 247 +41%

EBITDA (M. €)

EBITDA EBITDA Margin

Main highlights9

  • Consolidated turnover increased 0.5% to 624 million euro (621 million euro), driven by growth of new services and products and despite the impact of regulated decreases in mobile termination rates.
  • Consolidated Operational Cash-Flow (EBITDA) rose 22% to 151 million euro (124 million euro), generating an EBITDA margin of 24% (20%). This increase was driven by the higher EBITDA contributions from Optimus and Sonaecom Fixed, reflecting the results of investments focused on convergent products and mobile internet access and the result of the investment in ADSL 2+ broadband services over ULL.
  • Consolidated net profit increased 17 million euro to 35 million euro (18 million euro), driven by the positive EBITDA performance. As a consequence, profit attributable to equity holders of Sonaecom increased 20 million euro to 27 million euro (7 million euro). The consolidated net profit was negatively impacted by: (i) the 6 million euro increase in depreciation and amortisation charges, explained by the extension of Optimus' network and by investments in the network to support direct access; (ii) increased net financial charges, which amounted to 13 million euro (10 million euro), due to higher average cost of debt and lower interest income, driven by the decrease in liquidity, a consequence of the use of cash for the acquisition of just over 1% of PT's share capital during 2Q06.
  • Consolidated gross debt stood at 464 million euro similar to the level in December 2005 which was 461 million euro. Consolidated liquidity decreased 94 million euro to 115 million euro, reflecting the acquisition of a 1% shareholding in Portugal Telecom and the cash inflow from the sale of Enabler. Consolidated net debt as at 30 September 2006 amounted to 349 million euro (262 million euro), 98 million euro up on net debt as at 31 December 2005.

9 9M05 are pro-forma figures excluding Enabler's contribution which was sold in 2Q06.

SONAE CAPITAL

Sonae Capital is made up of businesses in Tourism, Real Estate Development and Engineering Services, Facility Management, Insurance Brokerage and Risk Management and Seed and Risk Capital.

Consolidated turnover of Sonae Capital decreased around 21% to 322 million euro (410 million euro), mainly due to a decrease in the contribution of the Tourism business which resulted from the sale of control over Star, the travel agency format, to the Retail business and to a lower level of activity in the Construction business.

Consolidated operational cash flow (EBITDA) decreased 22% to 10.4 million euro (13.4 million euro), mostly due to lower contributions from the Plywood and Construction businesses, despite higher contributions from Insurance Brokerage and Facility Management.

Consolidated net profit for the period was 10.5 million euro (74.5 million euro). In the first nine months of 2005, net income included 52 million euro of investment income arising from the sale of a 27.8% shareholding in ba Vidro.

SONAE, SGPS, SA – Stand Alone Activity

The activity of Sonae, SGPS, SA, as a stand alone company, focused on the management of its holdings in affiliated companies.

During the first nine months of 2006 Sonae, SGPS, SA and its wholly-owed subsidiary Sonae Investments, BV purchased, on the stock market, shares of Modelo Continente, SGPS, SA, as a result of which its direct and indirect shareholding corresponds, as at 30 September 2006, to 99.39% of the share capital of Modelo Continente, SGPS, SA.

Also of significance was a bond issue of 250 million euro with a tenure of 5 years.

Net profits for the first nine months amounted to 157.6 million euro, and were favourably impacted by dividends from its affiliated companies Modelo Continente and Sonae Sierra.

CONSOLIDATED PROFITABILITY10

Consolidated turnover for the first nine months amounted to 3,157 million euro (2,950 million euro), a 7% increase driven by: (i) like for like growth and new store openings in the Retail business; (ii) inaugurations and acquisitions of new shopping centres; and (iii) positive impact of new services and products in the Telecommunications business, which largely compensated the reduction in mobile termination rates set by the regulator. The lower contributions from Sonae Capital and Holding, in the nine months, resulted from the sale of the travel agency format to the Retail business in the first quarter of 2006 and from a lower level of activity in the Construction business.

Consolidated operational cash flow (EBITDA) for the first nine months was 416 million euro (345 million euro), corresponding to a consolidated EBITDA margin of 13.2% (11.7%). The Shopping Centres business delivered most of the growth, through the increase in the valuation of investment properties, both due to the higher number of shopping centres under operation and to lower yields in Portugal and Spain. The Retail business achieved a sharp increase in its contribution to consolidated EBITDA, reflecting its strategy focused on growth. The operational improvement achieved by the Telecommunications business in the third quarter of 2006, mainly at Optimus and Sonaecom Fixed, combined with the performance in the second quarter, offset the lower contribution arising in the first quarter of the year.

Consolidated operational profit (EBIT) improved by 56 million euro in the first nine months to 243 million euro (187 million euro).

10 The consolidated profit and loss account for the first nine months of 2006 is not directly comparable with the figures for the first nine months of 2005, because of: the spin-off of the Wood Based Panels business (with accounting effects from 1 October 2005), the sale of the Retail operations in Brazil (with accounting effects from 1 December 2005), the change in the method of consolidation of the Shopping Centres business from full to proportionate (following the sale to Grosvenor, on 29 December 2005, of 17.04% of the share capital of Sonae Sierra) and the sale of the shareholding in Imocapital/Gescartão in the first quarter of 2005. 2006 actual figures are compared with 2005 pro-forma figures, which take account of these changes in the consolidation perimeter.

In the first nine months, consolidated net financial expenses totalled 65 million euro, remaining broadly in line with last year's first nine months figure (63.8 million euro). In spite of increases in interest rates, better financial conditions negotiated on some of the major loan contracts allowed net financial expenses to remain at the same level.

Consolidated profit for the first nine months was 186 million euro (155 million euro), with the impact of better operational performance and better results from associated undertakings being partially offset by lower investment income. Investment income in the first nine months was 52 million euro and included the gain on the sale of an additional 3.92% shareholding in ba Vidro, the price adjustment on the sale of the Brazilian retail operations and the gain on the sale of Enabler. In the first nine months of 2005, investment income totalled 62 million euro, most of which resulted from the gain on the sale of a 27.8% shareholding in ba Vidro.

The consolidated net profit attributable to equity holders of Sonae slightly improved for the first nine months, compared with the same period of last year, to 123 million euro (111 million euro).

Turnover EBITDA11 Values in million euro
Profit for the
Period
Retail 2,203 158 93
Shopping Centres 109 125 77
Telecommunications 624 132 38
Sonae Capital & Holding 329 4 63 *
Eliminations (108) (3) (85) *
TOTAL 3,157 416 186

Contributions to the consolidated total of Sonae, SGPS, SA were as follows:

* Includes dividends paid by the Retail and the Shopping Centres businesses.

11 EBITDA = Operational Profit (EBIT) + Depreciation and Amortisation + Provisions and Impairment Losses – Reversal of Impairment Losses (included in Other Operational Income and amounting to 6.5 M.€ in the first nine months of 2006 and 3.2 M.€ in the first nine months of 2005 pro-forma).

FINANCIAL STRUCTURE

Consolidated net debt12 as at 30 September 2006 amounted to 2,176 million euro, an increase of 556 million euro and 112 million euro compared to the end of 2005 and the end of the first half of the year, respectively. The increase in the quarter reflects the seasonality of most consumer businesses. Of the total consolidated net debt as at 30 September 2006, 582 million euro are attributable to the Shopping Centres business and are fully and exclusively guaranteed by its own assets.

30 Sep'06 31 Dec'05 Values in million euro
∆
Retail 535 196 339
Shopping Centres 582 499 83
Telecommunications 348 250 98
Sonae Capital & Holding 657 501 168
Eliminations 54 174 (120)
TOTAL 2,176 1,620 568

Contributions to the consolidated net debt of Sonae, SGPS, SA were as follows:

The ratio of consolidated net debt to annualised13 consolidated operational cash flow (EBITDA) was 3.3, which compares with 3.7 as at 30 September 2005, 1.7 as at 31 December 2005, 2.9 as at 31 March 2006 and 3.3 as at 30 June 2006. Annualised13 interest cover was 7.1 (5.7), up from 6.1 at the end of 2005. This increase reflects the operational improvements achieved.

12 Net Debt = Non-Current Borrowings + Current Borrowings – Cash and Cash Equivalents – Current Investments. 13 Annualised = Last 12 months

OUTLOOK

The performance in the first three quarters leads us to believe that 2006 will be a good year. Businesses are delivering on their growth strategies whilst improving overall operational profitability.

Significant events are expected during the last quarter of the year as a result of the public offer for Portugal Telecom, following final decisions. We remain confident that our bid will be successful.

Maia, 09 November 2006

The Board of Directors

Belmiro Mendes de Azevedo

Álvaro Carmona e Costa Portela

Álvaro Cuervo García

Ângelo Gabriel Ribeirinho dos Santos Paupério

Duarte Paulo Teixeira de Azevedo

Luíz Felipe Palmeira Lampreia

Michel Marie Bon

Nuno Manuel Moniz Trigoso Jordão

Nuno Miguel Teixeira de Azevedo

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2006

CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2006 AND 31 DECEMBER 2005

(Amounts expressed in euro)

IFRS
30.09.2006 31.12.2005
ASSETS Notes
NON-CURRENT ASSETS:
Tangible and intangible assets 9 2,334,380,419 2,229,679,896
Investment properties 10 1,513,321,295 1,357,421,085
Goodwill 11 241,599,401 245,578,246
Investments 12 277,111,097 157,628,576
Deferred tax assets 15 109,314,683 108,484,039
Other non-current assets 13 30,343,179 35,739,020
Total Non-Current Assets 4,506,070,074 4,134,530,862
CURRENT ASSETS:
Stocks 479,306,532 460,480,885
Trade account receivables and other current assets 14 616,055,217 788,701,424
Investments held for trading 12 12,021,626 10,681,441
Cash and cash equivalents 16 201,302,262 912,294,316
Total Current Assets 1,308,685,638 2,172,158,066
TOTAL ASSETS 5,814,755,712 6,306,688,928
EQUITY AND LIABILITIES
EQUITY:
Share capital 17 2,000,000,000 2,000,000,000
Own shares (142,961,431) (143,630,520)
Reserves and retained earnings (755,785,467) (1,228,449,591)
Profit/(Loss) for the year attributable to the equity holders of sonae 122,742,052 512,803,285
Equity attributable to the equity holders of Sonae 1,223,995,154 1,140,723,174
Equity attributable to minority interests 18 428,748,392 394,707,612
TOTAL EQUITY 1,652,743,546 1,535,430,786
LIABILITIES:
NON-CURRENT LIABILITIES:
Loans 19 2,164,351,600 1,848,626,142
Other non-current liabilities 21 114,160,976 586,412,836
Deferred tax liabilities 15 269,390,238 238,184,261
Provisions 24 63,403,818 54,477,919
Total Non-Current Liabilities 2,611,306,632 2,727,701,158
CURRENT LIABILITIES:
Loans 19 224,894,669 694,492,525
Trade creditors and other non-current liabilities 23 1,323,514,985 1,346,779,476
Provisions 24 2,295,881 2,284,983
Total Current Liabilities 1,550,705,534 2,043,556,984
TOTAL EQUITY AND LIABILITIES 5,814,755,712 6,306,688,928

The accompanying notes are part of these financial statements.

CONSOLIDATED INCOME STATEMENTS BY NATURE

FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2006 AND 2005

(Amounts expressed in euro)

IFRS
30.09.2006 30.09.2005
Notes Total Operations Pro-forma Total Operations
Operational income
Sales 2,299,848,553 2,121,314,921 4,064,292,965
Services rendered 857,296,099 828,861,468 878,500,151
Value created on investment properties 72,312,615 28,664,330 57,345,972
Other operational income 285,907,827 266,606,794 404,992,138
Total operational income 3,515,365,093 3,245,447,513 5,405,131,226
Operational expenses
Cost of goods sold and materials consumed (1,799,599,847) (1,674,271,018) (2,856,738,189)
Changes in stocks of finished goods and work in progress 9,937,280 1,113,573 4,562,118
External supplies and services (827,238,349) (781,489,360) (1,185,829,004)
Staff costs (422,461,346) (392,773,529) (643,398,837)
Depreciation and amortisation (167,105,601) (154,349,472) (249,178,355)
Provisions and impairment losses (12,619,274) (7,078,753) (21,607,733)
Other operational expenses (53,398,988) (49,603,812) (93,920,433)
Total operational expenses (3,272,486,125) (3,058,452,371) (5,046,110,433)
Operational profit/(loss) 242,878,968 186,995,141 359,020,793
Net financial expenses (65,012,628) (63,758,443) (127,322,986)
Share of results of associated undertakings 3,388,078 1,642,438 2,099,982
Investment income 51,673,037 61,628,685 104,031,597
Profit/(Loss) before taxation 232,927,455 186,507,822 337,829,384
Taxation (47,376,709) (31,313,163) (63,299,536)
Profit/(Loss) after taxation 185,550,746 155,194,659 274,529,848
Profit/(Loss) for the period 185,550,746 155,194,659 274,529,848
Attributable to:
Equity holders of Sonae 122,742,052 111,348,242 193,814,537
Minority interests 62,808,694 43,846,417 80,715,311
Profit/(Loss) per share
Basic 0.065772 0.059674 0.103870
Diluted 0.065772 0.059674 0.103870

The accompanying notes are part of these financial statements.

CONSOLIDATED INCOME STATEMENTS BY NATURE

FOR THE QUARTERS ENDED 30 SEPTEMBER 2006 AND 2005

(Amounts expressed in euro)

IFRS
2006 2005
3rd Quarter
Notes 3rd Quarter Pro-forma 3rd Quarter
Operational income
Sales 856,440,122 776,614,634 1,421,444,279
Services rendered 301,610,951 300,861,915 316,027,006
Value created on investment properties 887,856 (461,336) (870,354)
Other operational income 99,079,159 88,975,238 130,243,444
Total operational income 1,258,018,087 1,165,990,451 1,866,844,375
Operational expenses
Cost of goods sold and materials consumed (669,852,299) (622,890,676) (1,016,183,353)
Changes in stocks of finished goods and work in progress 3,652,840 2,308,884 (2,129,208)
External supplies and services (294,162,803) (288,368,525) (424,703,873)
Staff costs (137,066,065) (135,227,884) (218,984,633)
Depreciation and amortisation (56,935,025) (50,168,355) (82,611,414)
Provisions and impairment losses (7,028,413) (2,597,059) (4,676,717)
Other operational expenses (17,957,783) (14,602,400) (26,452,047)
Total operational expenses (1,179,349,549) (1,111,546,016) (1,775,741,245)
Operational profit/(loss) 78,668,538 54,444,434 91,103,130
Net financial expenses (23,782,856) (22,865,247) (42,879,360)
Share of results of associated undertakings 992,460 502,968 854,605
Investment income 2,350,385 9,190,463 9,275,065
Profit/(Loss) before taxation 58,228,528 41,272,618 58,353,440
Taxation (13,424,260) (8,838,340) (12,095,997)
Profit/(Loss) after taxation 44,804,268 32,434,277 46,257,443
Profit/(Loss) for the period 44,804,268 32,434,277 46,257,443
Attributable to:
Equity holders of Sonae 37,668,538 27,083,192 29,157,750
Minority interests 7,135,730 5,351,085 17,099,693
Profit/(Loss) per share
Basic 0.020180 0.014514 0.015626
Diluted 0.020180 0.014514 0.015626

The accompanying notes are part of these financial statements.

SONAE, S.G.P.S., S.A.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2006 AND 2005

(Amounts expressed in euro)

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The accompanying notes are part of these financial statements.

The Board of Directors

(1) Includes 17,729,243 euro relating to the writte-off of negative goodwill of the Gescartão group, sold in the period;

SONAE, S.G.P.S., S.A.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2006 AND 2005

(Amounts expressed in euro)

IFRS
30.09.2006 30.09.2005
OPERATING ACTIVITIES Notes Total Operations Pro-forma Total Operations
Net cash flow from operating activities (1) 240,494,193 135,711,305 248,468,808
INVESTMENT ACTIVITIES
Cash receipts arising from:
Investments
Tangible, intangible assets and propertie investments
Dividends
Others		 335,194,109
18,492,471
4,114,630
28,851,059		 247,674,237
17,422,314
14,493,593
219,360,711		 225,276,079
77,681,610
14,540,650
82,866,282
Cash Payments arising from:
Investments
Tangible, intangible assets and propertie investments
Others		 386,652,269
(624,980,669)
(376,328,015)
(14,463,925)
(1,015,772,609)		 498,950,855
(299,307,394)
(301,922,557)
(29,399,394)
(630,629,345)		 400,364,621
(365,513,022)
(461,233,971)
(43,631,452)
(870,378,445)
Net cash used in investment activities (2) (629,120,340) (131,678,490) (470,013,824)
FINANCING ACTIVITIES
Cash receipts arising from:
Loans obtained
Capital increases, additional paid in capital and share premiums
Sale of own shares
Others		 1,693,703,517
1,122,732
-
-		 2,834,691,852
3,327,973
1,586,339
276,624		 3,238,070,269
3,505,946
1,586,339
553,238
1,694,826,249 2,839,882,788 3,243,715,792
Cash Payments arising from:
Loans obtained
Interest and similar charges
Reimbursement of capital and paid in capital
Dividends
Others		 (1,875,053,491)
(86,801,396)
(895,881)
(57,715,549)
(376,030)		 (2,778,382,245)
(79,608,778)
(779,334)
(42,237,454)
(39,931,345)		 (2,927,682,396)
(154,155,017)
(1,564,636)
(46,064,311)
(39,934,474)
(2,020,842,347) (2,940,939,156) (3,169,400,834)
Net cash used in financing activities (3) (326,016,098) (101,056,368) 74,314,958
Net increase in cash and cash equivalents (4) = (1) + (2) + (3)
Effect of foreign exchange rate
Cash and cash equivalents at the beginning of the period		 (714,642,245)
(89,446)
893,621,051		 (97,023,553)
(559,933)
298,584,461		 (147,230,058)
(7,336,435)
461,406,436
Cash and cash equivalents at the end of the period 16 179,068,252 202,120,841 321,512,813

The accompanying notes are part of these financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED AS AT 30 SEPTEMBER 2006

(Amounts expressed in euro)

1. INTRODUCTION

SONAE, SGPS, SA ("the Company" or "Sonae"), whose head-office is at Lugar do Espido, Via Norte, Apartado 1011, 4470-909 Maia, Portugal, is the parent company of a group of companies, as detailed in Notes 4 to 7 ("Sonae Group"). The Group's operations and business segments are described in Note 30.

The consolidated profit and loss account and the consolidated statement of cash flows for the nine months ended as at 30 September 2006 are not directly comparable with the statements for the first nine months of 2005, because of: the spin-off of the Wood Based Panels business (with accounting effects from 1 October 2005), the sale of the Retail operations in Brazil (with accounting effects from 1 December 2005), the change in the method of consolidation of the Shopping Centres business from full to proportionate consolidation (following the sale to Grosvenor, on 29 December 2005, of 17.04% of share capital of Sonae Sierra) and the sale of the shareholding in Imocapital/Gescartão in the first quarter of 2005.

The pro-forma consolidated income statement and the consolidated statement of cash flows as at 30 September 2005 include the above mentioned changes in the consolidation perimeter as from 1 January 2005.

2. PRINCIPAL ACCOUNTING POLICIES

The accounting policies adopted are consistent with those followed in the preparation of annual financial statements for the year ended 31 December 2005.

Basis of preparation

The accompanying consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS" – previously named International Accounting Standards – "IAS"), issued by the International Accounting Standards Board ("IASB") and interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC") or by the previous Standing Interpretations Committee ("SIC"), applicable to financial years beginning on 1 January 2006.

Interim financial statements are presented quarterly, in accordance with IAS 34 – "Interim Financial Reporting".

3. CHANGES IN ACCOUNTING POLICIES AND CORRECTION OF ERRORS

During the period there were no changes in accounting policies or prior period errors.

4. GROUP COMPANIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS

Group companies included in the consolidated financial statements, their head offices and percentage of share capital held by the Group as at 30 September 2006 and 31 December 2005 are as follows:

Percentage of capital held
30.09.2006 31.12.2005
COMPANY Head Office Direct Total Direct Total
Sonae - SGPS, S.A. Maia HOLDING HOLDING HOLDING HOLDING
Modelo Continente
2) Bertimóvel - Sociedade Imobiliária, SA a) Matosinhos 100.00% 99.39% 100.00% 100.00%
Best Offer-Prest. Inf. p/Internet, SA a) Maia 100.00% 99.39% 100.00% 98.06%
Bikini, Portal de Mulheres, SA a) Maia 100.00% 99.39% 100.00% 98.06%
Cacetinho-Com. Retalhista e Expl.Centros
Com., SA		 a) Matosinhos 100.00% 99.39% 100.00% 98.06%
Canasta – Empreendimentos Imobiliários,
SA		 a) Maia 100.00% 99.39% 100.00% 98.06%
Carnes do Continente-Ind.Distr.Carnes, SA a) Santarém 100.00% 99.39% 100.00% 98.06%
Chão Verde-Soc.Gestora Imobiliária, SA a) Maia 100.00% 99.39% 100.00% 98.06%
Citorres-Sociedade Imobiliária, SA a) Maia 100.00% 99.39% 100.00% 98.06%
Contibomba-Comérc.Distr.Combustiveis,
SA		 a) Matosinhos 100.00% 99.39% 100.00% 98.06%
Contimobe-Imobil.Castelo Paiva, SA a) Castelo de Paiva 100.00% 99.39% 100.00% 98.06%
Cumulativa - Sociedade Imobiliária, SA a) Marinha Grande 100.00% 99.39% 100.00% 98.06%
Difusão-Sociedade Imobiliária, SA a) Maia 100.00% 99.39% 100.00% 98.06%
Distrifin-Comercio y Prest.Servicios, SA a) Madrid (Spain) 100.00% 99.39% 100.00% 98.06%
Efanor-Design e Serviços, SA a) Matosinhos 100.00% 99.39% 100.00% 98.06%
Efanor-Indústria de Fios, SA a) Matosinhos 100.00% 99.39% 100.00% 98.06%
2) 4) Equador & Burnay, Lda a) Lisboa 100.00% 99.45% 100.00% 99.01%
2) Equador & Mendes, Lda a) Lisboa 75.00% 74.59% 75.00% 74.25%
Estevão Neves-Hipermercados Madeira,
SA		 a) Madeira 100.00% 99.39% 100.00% 98.06%
2) 4) Exit Travel, SA a) Maia 100.00% 99.45% 100.00% 99.01%
Fozimo-Sociedade Imobiliária, SA a) Maia 100.00% 99.39% 100.00% 98.06%
Fozmassimo-Sociedade Imobiliária, SA a) Matosinhos 100.00% 99.39% 100.00% 98.06%
Fundo de Investimento Imobiliário
Imosonae Dois		 a) Maia 100.00% 99.39% 99.98% 98.03%
Fundo Fechado de Investimento Imobiliário
Efisa Imobiliário		 a) Lisboa 100.00% 99.39% 100.00% 98.06%
Global S-Hipermercado, Lda a) Matosinhos 100.00% 99.39% 100.00% 98.06%
IGI-Investimento Imobiliário, SA a) Porto 100.00% 99.39% 100.00% 98.06%
Igimo-Sociedade Imobiliária, SA a) Maia 100.00% 99.39% 100.00% 98.06%
Imoconti- Soc.Imobiliária, SA a) Matosinhos 100.00% 99.39% 100.00% 98.06%
Imoestrutura-Soc.Imobiliária, SA a) Maia 100.00% 99.39% 100.00% 98.06%
Imomuro-Sociedade Imobiliária, SA a) Matosinhos 100.00% 99.39% 100.00% 98.06%
Imoponte-Soc.Imobiliaria, SA a) Maia 100.00% 99.39% 100.00% 98.06%
Imoresultado-Soc.Imobiliaria, SA a) Maia 100.00% 99.39% 100.00% 98.06%
Imosistema-Sociedade Imobiliária, SA a) Maia 100.00% 99.39% 100.00% 98.06%
Infofield-Informática, SA a) Maia 100.00% 99.39% 100.00% 98.06%
9) Informeios-Projectos e Representacões,
SA		 a) Lisboa 100.00% 99.39% 100.00% 98.06%
Inventory-Acessórios de Casa, SA a) Maia 100.00% 99.39% 100.00% 98.06%
Marcas MC, zRT a) Budapest 100.00% 99.39% 100.00% 98.06%
Max Office Artigos Serviços p/escrit., SA a) Maia 100.00% 99.39% 100.00% 98.06%
MJLF – Empreendimentos Imobiliários, SA a) Maia 100.00% 99.39% 100.00% 98.06%
Modalfa-Comércio e Serviços, SA a) Maia 100.00% 99.39% 100.00% 98.06%
Modelo - Dist.de Mat. de Construção, SA b) Maia 50.00% 49.69% 50.00% 49.03%
Modelo Continente Hipermercados,SA a) Matosinhos 100.00% 99.39% 100.00% 98.06%
Modelo Continente, SGPS, SA a) Matosinhos 99.39% 99.39% 98.06% 98.06%
Modelo Continente-Oper.Retalho SGPS,
SA		 a) Matosinhos 100.00% 99.39% 100.00% 98.06%
Modelo Hiper Imobiliária, SA a) Maia 100.00% 99.39% 100.00% 98.06%
3) Modelo Investimentos (Brasil), Ltda a) São Paulo (Brazil) 100.00% 99.39% 100.00% 98.06%
Modelo,SGPS, SA a) Maia 100.00% 99.39% 100.00% 98.06%
Modelo.com-Vendas p/Correspond., SA a) Maia 100.00% 99.39% 100.00% 98.06%
Modis Distribuição Centralizada, SA a) Matosinhos 100.00% 99.39% 100.00% 98.06%
5)
Modis Internacional Trading, SA a) Madrid (Spain) 100.00% 99.39% 100.00% 98.06%
2) Nova Equador Internacional,Ag.Viag.T, Lda a) Lisboa 75.00% 74.59% 75.00% 74.25%
OK Bazar-Comércio Geral, SA a) Ermesinde 100.00% 99.39% 100.00% 98.06%
Peixes do Continente - Indústria e
Distribuição de Peixes, SA		 a) Matosinhos 100.00% 99.39% 100.00% 98.06%
Predicomercial-Promoção Imobiliária, SA a) Maia 100.00% 99.39% 100.00% 98.06%
2) 4) Santos Taborda & Carvalho,SU, Lda a) Lisboa 100.00% 99.45% 100.00% 99.01%
Selifa – Empreendimentos Imobiliários, SA a) Maia 100.00% 99.39% 100.00% 98.06%
Sempre à Mão - Sociedade Imobiliária, SA a) Matosinhos 100.00% 99.39% 100.00% 98.06%
Sesagest-Proj.Gestão Imobiliária, SA a) Porto 100.00% 99.39% 100.00% 98.06%
6) SM Empreendimentos Imobiliários, Ltda a) Porto Alegre (Brazil) 100.00% 99.39% 100.00% 98.06%
Socijofra-Sociedade Imobiliária, SA a) Gondomar 100.00% 99.39% 100.00% 98.06%
Sociloures-Soc.Imobiliária, SA a) Matosinhos 100.00% 99.39% 100.00% 98.06%
Soflorin, BV a) Amsterdam (The
Netherlands)		 100.00% 99.39% 100.00% 98.06%
10) Solaris - Supermercados, SA a) Viana do Castelo 100.00% 99.39% 100.00% 98.06%
2) Sonae Capital Brasil, Lda a) São Paulo (Brazil) 100.00% 99.39% 100.00% 100.00%
Sonae Retalho Espana-Servicios Gen., SA a) Madrid (Spain) 100.00% 99.39% 100.00% 98.06%
Sondis Imobiliária, SA a) Maia 100.00% 99.39% 100.00% 98.06%
Sontária-Empreend.Imobiliários, SA a) Maia 100.00% 99.39% 100.00% 98.06%
Sonvecap, BV a) Amsterdam (The
Netherlands)		 100.00% 99.39% 100.00% 98.06%
Sport Zone-Comércio Art.Desporto, SA a) Matosinhos 100.00% 99.39% 100.00% 98.06%
SRE-Projectos e Consultadoria, SA a) Maia 100.00% 99.39% 100.00% 98.06%
2) Star-Viagens e Turismo, SA a) Lisboa 100.00% 99.45% 100.00% 99.01%
Tlantic Sistemas de Informação, Ltda a) Porto Alegre (Brazil) 100.00% 99.39% 100.00% 98.06%
Todos os Dias-Com.Ret.Expl.C.Comer.,
SA		 a) Matosinhos 100.00% 99.39% 100.00% 98.06%
Worten-Equipamento para o Lar, SA a) Matosinhos 100.00% 99.39% 100.00% 98.06%
Sonaecom
Digitmarket-Sistemas de Informação, SA a) Maia 75.10% 46.37% 75.10% 46.98%
7) Enabler & Retail Consult, GmbH a) Germany 85.00% 37.38% 85.00% 37.88%
7) Enabler Brasil, Ltda a) Curitiba (Brazil) 99.99% 43.97% 99.99% 44.56%
7) Enabler France a) France 100.00% 43.97% 100.00% 44.56%
7) Enabler UK, Ltd a) U.K. 100.00% 43.97% 100.00% 44.56%
7) Enabler-Informática, SA a) Maia 98.50% 43.97% 98.50% 44.56%
M3G-Edições Digitais, SA a) Lisboa 100.00% 61.13% 100.00% 62.56%
Mainroad Information Tecnology, SA a) Maia 100.00% 61.75% 100.00% 62.56%
Miauger-Org. Gestão Leilões El., SA a) Maia 100.00% 61.75% 100.00% 62.56%
Novis Telecom, SA a) Maia 100.00% 61.75% 100.00% 62.56%
Optimus Telecomunicações, SA a) Maia 69.24% 42.76% 69.24% 43.31%
Optimus Towering-Explor. Torres Telecom,
SA		 a) Maia 100.00% 42.76% 100.00% 43.31%
Per-Mar-Sociedade de Construções, SA a) Maia 100.00% 42.76% 100.00% 43.31%
Público-Comunicação Social, SA a) Porto 99.00% 61.13% 99.99% 62.56%
7) Retailbox, BV a) Amsterdam (The 75.50% 44.64% 75.50% 45.24%
Sonae Matrix Multimédia, SGPS, SA a) Netherlands)
Maia		 100.00% 61.75% 100.00% 62.56%
Sonae Telecom SGPS, SA a) Maia 100.00% 61.75% 100.00% 62.56%
Sonae Telecom, BV a) Amsterdam (The
Netherlands)		 100.00% 61.75% 100.00% 62.56%
Sonae.com,SGPS, SA a) Maia 61.75% 61.75% 62,56% 62.56%
1) Sonaecom BV a) Amsterdam (The
Netherlands)		 100.00% 61.75% - -
We Do Brasil-Soluções Informáticas, Ltda a) Rio de Janeiro (Brazil) 99.89% 60.19% 100.00% 59.66%
We Do Consulting-SI, SA a) Maia 96,71% 60.25% 95.47% 59.72%
Sonae Capital
Águas Furtadas - Imobiliária, SA a) Matosinhos 100.00% 100.00% 100.00% 100.00%
Aqualuz - Turismo e Lazer, Lda a) Lagos 100.00% 100.00% 100.00% 100.00%
Aquapraia Investimentos Turísticos, SGPS,
SA		 a) Lisboa 100.00% 100.00% 100.00% 100.00%
Aquapraia-Investimentos Turísticos, SA a) Grândola 100.00% 100.00% 100.00% 100.00%
Azulino Imobiliária, SA a) Matosinhos 100.00% 100.00% 100.00% 100.00%
Becim - Corretora de Seguros, Lda a) Santa Maria da Feira 100.00% 100.00% 100.00% 100.00%
Bloco Q-Sociedade Imobiliária, SA a) Porto 100.00% 100.00% 100.00% 100.00%
Bloco W-Sociedade Imobiliária, SA a) Matosinhos 100.00% 100.00% 100.00% 100.00%
Box Lines Navegação, SA a) Porto 100.00% 100.00% 100.00% 100.00%
Campimeios - Sociedade Imobiliária, SA a) Maia 100.00% 100.00% 100.00% 100.00%
Casa da Ribeira - Hotelaria e Turismo, SA a) Marco de Canaveses 100.00% 100.00% 100.00% 100.00%
Centro Residencial da Maia,Urban., SA a) Porto 100.00% 100.00% 100.00% 100.00%
Cinclus Imobiliária, SA a) Porto 100.00% 100.00% 100.00% 100.00%
Cinclus-Plan. e Gestão de Projectos, SA a) Porto 100.00% 100.00% 100.00% 100.00%
Contacto Concessões, SGPS, SA a) Maia 100.00% 100.00% 100.00% 100.00%
Contacto-SGPS, SA a) Porto 100.00% 100.00% 100.00% 100.00%
Contacto-Sociedade de Construções, SA a) Porto 100.00% 100.00% 100.00% 100.00%
Country Club da Maia-Imobiliaria, SA a) Maia 100.00% 100.00% 100.00% 100.00%
Cronosaúde – Gestão Hospitalar, SA a) Porto 50.00% 50.00% 50.00% 50.00%
Elmo SGPS, SA a) Maia 100.00% 100.00% 100.00% 100.00%
Empreend.Imob.Quinta da Azenha, SA a) Maia 100.00% 100.00% 100.00% 100.00%
Espimaia -Sociedade Imobiliária, SA a) Maia 100.00% 100.00% 100.00% 100.00%
Friengineering, SA a) Matosinhos 100.00% 50.10% 100.00% 50.10%
1) Fundo de Investimento Imobiliário Imosede a) Maia 100.00% 99.79% - -
Gestholdings-SGPS, SA a) Porto 100.00% 100.00% 100.00% 100.00%
Golf Time - Golfe e Inv.Turisticos, SA a) Porto 75.00% 75.00% 75.00% 75.00%
Imoareia Investimentos Turisticos, SGPS,
SA		 a) Matosinhos 100.00% 100.00% 100.00% 100.00%
Imobiliária da Cacela, SA a) Matosinhos 100.00% 100.00% 100.00% 100.00%
Imoclub-Serviços Imobilários, SA a) Matosinhos 100.00% 100.00% 100.00% 100.00%
Imodivor - Sociedade Imobiliária, SA a) Maia 100.00% 100.00% 100.00% 100.00%
Imoferro-Soc.Imobiliária, SA a) Maia 100.00% 100.00% 100.00% 100.00%
Imohotel-Emp.Turist.Imobiliários, SA a) Matosinhos 100.00% 100.00% 100.00% 100.00%
Imopenínsula - Sociedade Imobiliária, SA a) Grândola 100.00% 100.00% 100.00% 99.78%
Imoresort - Sociedade Imobiliária, SA a) Grândola 100.00% 100.00% 100.00% 99.78%
Imosedas-Imobiliária e Seviços, SA a) Matosinhos 100.00% 100.00% 100.00% 100.00%
Implantação - Imobiliária, SA a) Matosinhos 100.00% 100.00% 100.00% 100.00%
Inparvi SGPS, SA a) Maia 100.00% 100.00% 100.00% 100.00%
Insulatroia - Sociedade Imobiliária, SA a) Grândola 100.00% 100.00% 100.00% 99.78%
Integrum-Serviços Partilhados, SA a) Maia 100.00% 35.07% 100.00% 35.07%
Interlog-SGPS, SA a) Lisboa 100.00% 100.00% 100.00% 100.00%
8) Invicta - Comércio Internacional, SA a) Maia 100.00% 100.00% 100.00% 100.00%
INVSAUDE - Gestão Hospitalar, SA a) Maia 50.00% 50.00% 50.00% 50.00%
ISF - Imobiliário, Serviços e Participações a) Porto 100.00% 100.00% 100.00% 100.00%
Isoroy Casteljaloux a) Casteljaloux (France) 100.00% 100.00% 100.00% 100.00%
Leroy Gabon, SA a) Libreville (Gabon) 99.99% 99.99% 99.99% 99.99%
Libra Serviços, Lda a) Funchal 100.00% 100.00% 100.00% 100.00%
Marimo -Exploração Hoteleira Imobiliária a) Grândola 100.00% 100.00% 100.00% 99.78%
Marina de Troia, SA a) Troia 100.00% 100.00% 100.00% 100.00%
Marina Magic - Exploração de Centros Lúd. a) Lisboa 100.00% 100.00% 100.00% 100.00%
Marmagno-Expl.Hoteleira Imob., SA a) Grândola 100.00% 100.00% 100.00% 99.78%
Martimope - Sociedade Imobiliária, SA a) Maia 100.00% 100.00% 100.00% 100.00%
Marvero-Expl.Hoteleira Imob., SA a) Grândola 100.00% 100.00% 100.00% 99.78%
MDS - Corrector de Seguros, SA a) Porto 100.00% 100.00% 100.00% 100.00%
NAB, Sociedade Imobiliária, SA a) Porto 100.00% 100.00% 100.00% 100.00%
Parcomarco, Gest Parq Est Centros Comer a) Matosinhos 100.00% 100.00% 100.00% 100.00%
Partnergiro-Empreendimentos Turisticos,
SA		 a) Maia 100.00% 100.00% 100.00% 100.00%
PJP - Equipamento de Refrigeração, Lda a) Matosinhos 100.00% 35.07% 100.00% 35.07%
Placage d'Okoumé du Gabon a) Libreville (Gabon) 99.88% 99.88% 99.88% 99.88%
Plysorol SAS a) Niort (France) 100.00% 100.00% 100.00% 100.00%
Plysorol SNC a) Lisieux (France) 98.01% 98.01% 98.01% 98.01%
Porturbe-Edificios e Urbanizações, SA a) Maia 100.00% 100.00% 100.00% 100.00%
Praedium II-Imobiliária, SA a) Maia 100.00% 100.00% 100.00% 100.00%
Praedium III-Serviços Imobiliários, SA a) Maia 100.00% 100.00% 100.00% 100.00%
Praedium-SGPS, SA a) Porto 100.00% 100.00% 100.00% 100.00%
Prédios Privados Imobiliária, SA a) Matosinhos 100.00% 100.00% 100.00% 100.00%
Predisedas-Predial das Sedas, SA a) Matosinhos 100.00% 100.00% 100.00% 100.00%
Promessa Sociedade Imobiliária, SA a) Maia 100.00% 100.00% 100.00% 100.00%
Promosedas-Prom.Imobiliária, SA a) Matosinhos 100.00% 100.00% 100.00% 100.00%
Publimeios-Soc.Gestora Part. Finan., SA a) Maia 50.10% 50.10% 50.10% 50.10%
Quinta da Covilhã-Empr.Imobiliários, SA a) Maia 100.00% 100.00% 100.00% 100.00%
Rochester Real Estate, Ltd a) Kent (U.K.) 100.00% 100.00% 100.00% 100.00%
Safira Services-Limpeza Espaços Verd.,
SA a) Porto 51.00% 25.55% 51.00% 25.55%
Saúde Atlântica - Gestão Hospitalar, SA a) Maia 50.00% 50.00% 50.00% 50.00%
SC Insurance Risks Services, SGPS, SA a) Maia 100.00% 100.00% 100.00% 100.00%
SC-Consultadoria,SA a) Porto 100.00% 100.00% 100.00% 100.00%
Selfrio,SGPS, SA a) Matosinhos 70.00% 35.07% 70.00% 35.07%
Selfrio-Engenharia do Frio, SA a) Matosinhos 100.00% 35.07% 100.00% 35.07%
SII - Soberana Investimentos Imobiliários,
SA		 a) Grândola 100.00% 100.00% 100.00% 99.78%
Sistavac-Sist.Aquecimento,V.Ar C., SA a) Matosinhos 100.00% 35.07% 100.00% 35.07%
SKK-Central de Distr., SA a) Porto 100.00% 35.07% 100.00% 35.07%
SKKFOR - Ser. For. e Desen. de Recursos a) Maia 96.00% 33.67% 96.00% 33.67%
SMP-Serv. de Manutenção Planeamento a) Matosinhos 100.00% 35.07% 100.00% 35.07%
Société de Tranchage Isoroy SAS a) France 100.00% 100.00% 100.00% 100.00%
Société des Essences Fines Isoroy a) Honfleur (France) 100.00% 100.00% 100.00% 100.00%
Soconstrução, BV a) Amsterdam (The
Netherlands)		 100.00% 100.00% 100.00% 100.00%
Soira-Soc.Imobiliária de Ramalde, SA a) Porto 100.00% 100.00% 100.00% 100.00%
Solinca III-Desporto e Saúde, SA a) Lisboa 100.00% 100.00% 100.00% 100.00%
Solinca Lazer,SGPS, SA a) Porto 100.00% 100.00% 100.00% 100.00%
Solinca-Investimentos Turísticos, SA a) Porto 100.00% 100.00% 100.00% 100.00%
Solinfitness - Club Malaga, SL a) Malaga (Spain) 100.00% 100.00% 100.00% 100.00%
Sonae Capital,SGPS, SA a) Porto 100.00% 100.00% 100.00% 100.00%
Sonae International, Ltd a) London (U.K.) 100.00% 100.00% 100.00% 100.00%
Sonae Turismo Gestão e Serviços, SA a) Porto 100.00% 100.00% 100.00% 100.00%
Sonae Turismo-SGPS, SA a) Porto 100.00% 100.00% 100.00% 100.00%
Sonae Wood Products, BV a) Amsterdam (The
Netherlands)		 100.00% 100.00% 100.00% 100.00%
7) Sontrade Lines, Ltd a) Hants (U.K.) 63.75% 63.75% 63.75% 63.75%
Sontur, BV a) Amsterdam (The
Netherlands)		 100.00% 100.00% 100.00% 100.00%
Sopair, SA a) Madrid (Spain) 60.00% 30.06% 60.00% 30.06%
Sótaqua - Soc. de Empreendimentos Turist a) Maia 100.00% 100.00% 100.00% 100.00%
Spinarq, SA a) Porto 100.00% 100.00% 100.00% 100.00%
Spinveste - Promoção Imobiliária, SA a) Porto 100.00% 100.00% 100.00% 100.00%
Spinveste-Gestão Imobiliária SGII, SA a) Porto 100.00% 100.00% 100.00% 100.00%
9) Terceiro Frente - Imobiliária, SA a) Matosinhos 100.00% 100.00% 100.00% 100.00%
Textil do Marco, SA a) Marco de Canaveses 90.37% 90.37% 90.37% 90.37%
Torre São Gabriel-Imobiliária, SA a) Maia 100.00% 100.00% 100.00% 100.00%
11) Troiaresort - Investimentos Turisticos, SA a) Grândola 100.00% 100.00% 99.78% 99.78%
Troiaverde-Expl.Hoteleira Imob., SA a) Grândola 100.00% 100.00% 100.00% 99.78%
Tulipamar-Expl.Hoteleira Imob., SA a) Grândola 100.00% 100.00% 100.00% 99.78%
Unibroker - Correctores de Seguros, SA a) Santa Maria da Feira 100.00% 100.00% 100.00% 100.00%
Urbisedas-Imobiliária das Sedas, SA a) Matosinhos 100.00% 100.00% 100.00% 100.00%
Venda Aluga-Sociedade Imobiliária, SA a) Maia 100.00% 100.00% 100.00% 100.00%
World Trade Center Porto, SA a) Porto 100.00% 100.00% 100.00% 100.00%
Others
1) Agloma Investimentos, SGPS, SA a) Maia 100.00% 100.00% - -
2) Aserraderos de Cuellar, SA a) Madrid (Spain) 100.00% 100.00% 100.00% 100.00%
Atlantic Ferries - Traf.Loc.Flu.e Marit., SA a) Grândola 100.00% 72.80% 100.00% 72.80%
Casa Agrícola João e António Pombo, SA a) Portel 66.67% 32.67% 66.67% 32.67%
Iginha-Sociedade Imobiliária, SA a) Matosinhos 100.00% 49.00% 100.00% 49.00%
2) Imoplamac Gestão de Imóveis, SA a) Santarém 100.00% 100.00% 100.00% 100.00%
Investalentejo, SGPS, SA b) Vila de Conde 49.00% 49.00% 49.00% 49.00%
Ipaper-Industria Papeis Impregnados, SA a) Maia 100.00% 24.99% 100.00% 28.25%
Sete e Meio - Investimentos e
Consultadoria, SA		 a) Grândola 100.00% 49.00% 100.00% 49.00%
Sete e Meio Herdades - Investimentos
Agricolas e Turismo, SA		 a) Grândola 100.00% 49.00% 100.00% 49.00%
Soltroia-Imob.de Urb.Turismo de Troia, SA a) Lisboa 100.00% 73.99% 100.00% 73.99%
2) Somit-Soc.Mad.Ind.Transformadas, SA a) Oliveira do Hospital 100.00% 100.00% 100.00% 100.00%
Sonae Investments, BV a) Amsterdam (The
Netherlands)		 100.00% 100.00% 100.00% 100.00%
Sonaegest-Soc.Gest.Fundos Investimentos a) Maia 80.00% 69.76% 80.00% 70.56%

1) Company acquired or incorporated in the period;

2) Company shown under Sonae Capital in the previous year;

3) Company merged into Sonae Capital Brasil, Lda;

4) Company merged into Star-Viagens e Turismo, SA;

  • 5) Company merged into Sonae Retalho Espana Servicios Gen.SA;
  • 6) Ex Sonae Medicamentos, Ltda;
  • 7) Company sold in the period;

8) Company merged into Box Lines Navegação, SA;

9) Company dissolved in the period;

10) Ex - Pinto Ribeiro - Supermercados, SA;

11) Ex - Torralta-Clube Internacional Férias, SA.

a) Majority of voting rights;

b) Management control.

These group companies are consolidated using the full consolidation method.

5. JOINTLY CONTROLLED COMPANIES

Jointly controlled companies included in the consolidated financial statements, their head offices and the percentage of share capital held by the Group as at 30 September 2006 and 31 December 2005 are as follows:

Percentage of capital held
30.09.2006 31.12.2005
COMPANY Head Office Direct Total Direct Total
Sonae Sierra
3DO Holding GmbH Dusseldorf (Germany) 100.00% 50.00% 100.00% 50.00%
3DO ShoppingCentre GmbH Dusseldorf (Germany) 100.00% 50.00% 100.00% 50.00%
3shoppings - Holding,SGPS, SA Maia 100.00% 25.05% 100.00% 25.05%
Aegean Park, SA Athens (Greece) 100.00% 25.00% 100.00% 25.00%
ALEXA Administration Gmbh Dusseldorf (Germany) 100.00% 24.75% 99.00% 24.75%
ALEXA Holding GmbH Dusseldorf (Germany) 50.00% 25.00% 50.00% 25.00%
ALEXA Shopping Centre GmbH Dusseldorf (Germany) 100.00% 25.00% 100.00% 25.00%
ALEXA Site Gmbh & Co. KG Dusseldorf (Germany) 99.00% 24.75% 99.00% 24.75%
Algarveshopping- Centro Comercial, SA Maia 100.00% 25.05% 100.00% 25.05%
Arrábidashopping- Centro Comercial, SA Vila Nova de Gaia 50.00% 12.53% 50.00% 12.53%
Avenida M-40, BV Amsterdam (The
Netherlands)		 100.00% 25.05% 100.00% 50.00%
Avenida M-40, SA Madrid (Spain) 100.00% 25.05% 100.00% 50.00%
Boavista Shopping Centre, BV Amsterdam (The
Netherlands)		 100.00% 50.00% 100.00% 50.00%
Cascaishopping- Centro Comercial, SA Lisboa 100.00% 12.53% 100.00% 12.53%
Cascaishopping Holding I, SGPS, SA Lisboa 100.00% 25.05% 100.00% 25.05%
Cascaishopping Holding II, SGPS, SA Maia 50.00% 12.53% 50.00% 12.53%
Centro Colombo- Centro Comercial, SA Lisboa 50.00% 12.53% 50.00% 12.53%
Centro Vasco da Gama-Centro Comercial,
SA		 Maia 50.00% 12.53% 50.00% 12.53%
Clérigoshopping- Gestão do C.Comerc., SA Maia 100.00% 50.00% 100.00% 50.00%
Coimbrashopping- Centro Comercial, SA Porto 100.00% 25.05% 100.00% 25.05%
2) Dortmund Tower Gmbh Dusseldorf (Germany) 100.00% 50.00% - -
Dos Mares - Shopping Centre, BV Amsterdam (The
Netherlands)		 100.00% 25.05% 100.00% 25.05%
Dos Mares-Shopping Centre, SA Madrid (Spain) 100.00% 25.05% 100.00% 25.05%
Estação Oriente-Gest.de Galerias Com., SA Maia 100.00% 50.00% 100.00% 50.00%
Estação Viana- Centro Comercial, SA Maia 100.00% 25.05% 100.00% 25.05%
Freccia Rossa- Shopping Centre, Srl Sondrio (Italy) 50.00% 25.00% 50.00% 25.00%
Fundo Investimento Imob. Shopping
Parque D. Pedro		 São Paulo (Brazil) 100.00% 48.27% 100.00% 48.95%
Gaiashopping I- Centro Comercial, SA Maia 50.00% 12.53% 50.00% 12.53%
Gaiashopping II- Centro Comercial, SA Maia 100.00% 12.53% 100.00% 12.53%
3) Gli Orsi - Shopping Centre, Srl Milan (Italy) 100.00% 50.00% 100.00% 50.00%
Guimarãeshopping- Centro Comercial, SA Maia 100.00% 25.05% 100.00% 25.05%
Iberian Assets, SA Barcelona (Spain) 49.78% 12.47% 49.78% 12.47%
Inparsa-Gestão de Galeria Comerc., SA Maia 100.00% 50.00% 100.00% 50.00%
La Farga - Shopping Centre, SL Barcelona (Spain) 100.00% 12.47% 100.00% 12.47%
7) Le Terrazze - Shopping Centre, Srl Milan (Italy) 50.00% 25.00% 50.00% 25.00%
8) Lima Retail Park, SA Viana do Castelo 50.00% 25.00% 50.00% 25.00%
Loureshopping- Centro Comercial, SA Maia 100.00% 50.00% 100.00% 50.00%
Luz del Tajo - Centro Comercial, SA Madrid (Spain) 100.00% 25.05% 100.00% 25.05%
Luz del Tajo, BV Amsterdam (The
Netherlands)		 100.00% 25.05% 100.00% 25.05%
Madeirashopping- Centro Comercial, SA Funchal 50.00% 12.53% 50.00% 12.53%
Maiashopping- Centro Comercial, SA Maia 100.00% 25.05% 100.00% 25.05%
MC Property Management, SA Athens (Greece) 75.00% 18.75% 75.00% 18.75%
Monselice Center, Srl Venice (Italy) 100.00% 25.05% 100.00% 25.05%
NorteShop. Retail and Leisure Centre, BV Amsterdam (The
Netherlands)		 50.00% 12.53% 50.00% 12.53%
Norteshopping-Centro Comercial, SA Porto 100.00% 12.53% 100.00% 12.53%
1) Oriogest, Srl Milan (Italy) 80.00% 20.00% 80.00% 20.00%
2) Park Avenue Develop. of Shop. Centers, SA Athens (Greece) 100.00% 25.00% - -
Parque Atlântico Shopping - Centro
Comercial SA		 Ponta Delgada 50.00% 12.53% 50.00% 12.53%
Parque D. Pedro 1, BV Luxemburg 100.00% 50.00% 100.00% 50.00%
Parque D. Pedro 2, BV Luxemburg 100.00% 50.00% 100.00% 50.00%
Parque de Famalicão - Empr. Imob., SA Maia 100.00% 50.00% 100.00% 50.00%
Parque Principado, SL Madrid (Spain) 50.00% 12.53% 50.00% 12.53%
Pátio Boavista Shopping, Ltda São Paulo (Brazil) 100.00% 46.61% 100.00% 48.85%
Pátio Penha Shopping, Ltda Brazil 99.99% 46.61% 99.99% 50.00%
2) Pátio Sertório Shopping Ltda Brazil 100.00% 46.61% - -
Plaza Eboli - Centro Comercial, SA Madrid (Spain) 100.00% 50.00% 100.00% 50.00%
Plaza Eboli, BV Amsterdam (The
Netherlands)		 100.00% 50.00% 100.00% 50.00%
Plaza Mayor Holding, SGPS, SA Maia 100.00% 25.05% 100.00% 25.05%
Plaza Mayor Parque de Ócio, BV Amsterdam (The 100.00% 25.05% 100.00% 25.05%
Netherlands)
Plaza Mayor Parque de Ocio, SA Madrid (Spain)
Amsterdam (The		 100.00% 25.05% 100.00% 25.05%
Plaza Mayor Shopping, BV Netherlands) 100.00% 50.00% 100.00% 50.00%
Plaza Mayor Shopping, SA Maia 75.00% 37.50% 75.00% 37.50%
Pridelease Investments, Ltd Cascais 100.00% 50.00% 100.00% 50.00%
Proj.Sierra Charagionis 1 -Dev.Sh.C., SA Athens (Greece) 100.00% 25.00% 100.00% 25.00%
Project SC 1, BV Amsterdam (The
Netherlands)		 50.00% 25.00% 50.00% 25.00%
Project Sierra 1 – Shopping Centre, GmbH Vienne (Austria) 100.00% 50.00% 100.00% 50.00%
Project Sierra 1, BV Amsterdam (The
Netherlands)		 100.00% 50.00% 100.00% 50.00%
2) Project Sierra 2 - Shopping Centre Gmbh Dusseldorf (Germany) 100.00% 50.00% - -
Project Sierra 2, BV Amsterdam (The
Netherlands)		 100.00% 50.00% 100.00% 50.00%
2) Project Sierra 3, BV Amsterdam (The
Netherlands)		 100.00% 50.00% - -
2) Project Sierra 4, BV Amsterdam (The
Netherlands)		 100.00% 50.00% - -
Project Sierra Brazil 1, BV Amsterdam (The
Netherlands)		 100.00% 50.00% 100.00% 50.00%
Project Sierra Germany 1- Shopping
Centre, GmbH		 Germany 100.00% 50.00% 100.00% 50.00%
Project Sierra Holding Portugal IV, SGPS, Matosinhos 100.00% 50.00% 100.00% 50.00%
SA
Project Sierra Holding Portugal V, SGPS,
SA Maia 100.00% 50.00% 100.00% 50.00%
Project Sierra Italy 1 - Shopping Centre, Srl Italy 100.00% 50.00% 100.00% 50.00%
2)6) Project Sierra Italy 3, Srl Torino (Italy) 100.00% 50.00% 25.00% 12.50%
Project Sierra Portugal I- C.Comercial, SA Maia 50.00% 25.00% 50.00% 25.00%
Project Sierra Portugal II-C.Comercial, SA Maia 100.00% 50.00% 100.00% 50.00%
Project Sierra Portugal III-C.Comercial, SA Maia 100.00% 50.00% 100.00% 50.00%
Project Sierra Portugal IV-C.Comercial, SA Maia 100.00% 50.00% 100.00% 50.00%
Project Sierra Portugal V-C.Comercial, SA Maia 100.00% 50.00% 100.00% 50.00%
Project Sierra Portugal VI - C. Comercial, SA Maia 100.00% 50.00% 100.00% 50.00%
4) Project Sierra Portugal VII - C. Comercial, SA Maia 100.00% 50.00% 100.00% 50.00%
5) Project Sierra Portugal VIII - C Comercial, SA Maia 100.00% 50.00% 100.00% 50.00%
Project Sierra Spain 1, BV Amsterdam (The
Netherlands)		 100.00% 50.00% 100.00% 50.00%
Project Sierra Spain 1-C.Comercial, SA Madrid (Spain) 70.00% 35.00% 70.00% 35.00%
Project Sierra Spain 2, BV Amsterdam (The
Netherlands)		 100.00% 50.00% 100.00% 50.00%
Project Sierra Spain 2-C. Comerial, SA Madrid (Spain) 100.00% 50.00% 75.00% 37.50%
Project Sierra Spain 3, BV Amsterdam (The
Netherlands)		 100.00% 50.00% 100.00% 50.00%
Project Sierra Spain 3-C. Comercial, SA Madrid (Spain) 100.00% 50.00% 100.00% 50.00%
Rio Sul - Centro Comercial, SA Maia 50.00% 25.00% 50.00% 25.00%
SC Aegean, BV Amsterdam (The
Netherlands)		 50.00% 25.00% 50.00% 25.00%
SC Mediterraneum Cosmos, BV Amsterdam (The
Netherlands)		 50.00% 25.00% 50.00% 25.00%
1) Segest, Srl Milan (Italy) 50.00% 25.00% 50.00% 25.00%
Serra Shopping - Centro Comercial, S.A. Maia 50.00% 25.00% 100.00% 25.00%
Shopping Centre Parque Principado, BV Amsterdam (The
Netherlands)		 100.00% 25.05% 100.00% 25.05%
Shopping Penha, BV Amsterdam (The 100.00% 50.00% 100.00% 50.00%
Sierra Asset Management-Gest. Activos, Netherlands)
Maia		 100.00% 50.00% 100.00% 50.00%
SA
Sierra Brazil 1, BV		 Amsterdam (The 100.00% 50.00% 100.00% 50.00%
Sierra Charagionis Develop. of Shop, Netherlands)
Athens (Greece)		 50.00% 25.00% 50.00% 25.00%
Centers, SA
Sierra Charagionis Propert.Management, SA		 Athens (Greece) 50.00% 25.00% 50.00% 25.00%
Sierra Corporate Services- Ap.Gestão, SA Maia 100.00% 50.00% 100.00% 50.00%
Sierra Corporate Services Holland, BV Amsterdam (The 100.00% 50.00% 100.00% 50.00%
Netherlands)
2) Sierra Develop.Iberia 1, Prom.Imob., SA
Sierra Development Greece, SA		 Maia
Athens (Greece)		 100.00%
100.00%		 50.00%
50.00%		 100.00%
-		 50.00%
-
Sierra Developments Germany Gmbh Germany 100.00% 50.00% 100.00% 50.00%
Amsterdam (The
Sierra Developments Germany Holding, BV Netherlands)
Amsterdam (The		 100.00% 50.00% 100.00% 50.00%
Sierra Developments Holding, BV Netherlands) 100.00% 50.00% 100.00% 50.00%
Sierra Developments Italy, Srl
Sierra Developments Spain-Prom.C.Com.,		 Milan (Italy)
Amsterdam (The		 100.00% 50.00% 100.00% 50.00%
SL Netherlands) 100.00% 50.00% 100.00% 50.00%
Sierra Developments, SGPS, SA Maia 100.00% 50.00% 100.00% 50.00%
Sierra Developments-Serv. Prom.Imob., SA Maia 100.00% 50.00% 100.00% 50.00%
Sierra Enplanta, Ltda São Paulo (Brazil) 100.00% 46.61% 50.00% 25.00%
Sierra European R.R.E. Assets Hold., BV Amsterdam (The
Netherlands)		 50.10% 25.05% 50.10% 25.05%
Sierra GP, Ltd Guernsey (U.K.) 100.00% 49.99% 100.00% 50.00%
9) Sierra Investimentos Brasil Ltda São Paulo (Brazil) 100.00% 46.61% 100.00% 50.00%
Sierra Investments (Holland) 1, BV Amsterdam (The
Netherlands)		 100.00% 50.00% 100.00% 50.00%
Sierra Investments (Holland) 2, BV Amsterdam (The
Netherlands)		 100.00% 50.00% 100.00% 50.00%
Sierra Investments Holding, BV Amsterdam (The
Netherlands)		 100.00% 50.00% 100.00% 50.00%
Sierra Investments SGPS, SA Porto 100.00% 50.00% 100.00% 50.00%
Sierra Italy Holding, BV Amsterdam (The
Netherlands)		 100.00% 50.00% 100.00% 50.00%
Sierra Man.New Tech.Bus.-Serv.Comu.CC,
SA		 Matosinhos 100.00% 50.00% 100.00% 50.00%
Sierra Management Germany, GmbH Dusseldorf (Germany) 100.00% 50.00% 100.00% 50.00%
Sierra Management II-Gestão de C.C., SA Maia 100.00% 50.00% 100.00% 50.00%
Sierra Management Italy, Srl Milan (Italy) 100.00% 50.00% 100.00% 50.00%
Sierra Management Portugal-Gest. CC, SA Lisboa 100.00% 50.00% 100.00% 50.00%
Madrid (Spain) 100.00% 50.00% 100.00% 50.00%
Sierra Management Spain-Gestión
C.Com., SA
Sierra Management, SGPS, SA Maia 100.00% 50.00% 100.00% 50.00%
Sonae Sierra Brasil, Ltda Brasil 100.00% 46.61% 100.00% 50.00%
Sonae Sierra Brazil, BV Luxemburg 100.00% 50.00% 100.00% 50.00%
Sonae Sierra, SGPS, SA Maia 50.00% 50.00% 50.00% 50.00%
SRP-Parque Comercial de Setúbal, SA Maia 50.00% 25.00% 50.00% 25.00%
Torre Colombo Oriente-Imobiliária, SA Porto 100.00% 12.53% 100.00% 12.53%
Unishopping Administradora, Ltda São Paulo (Brazil) 99.99% 46.60% 99.99% 25.00%
Unishopping Consultoria Imob., Ltda São Paulo (Brazil) 99.98% 46.59% 99.98% 25.00%
Valecenter Sierra Srl Venice (Italy) 100.00% 25.05% 100.00% 25.05%
Via Catarina- Centro Comercial, SA Maia 50.00% 12.53% 50.00% 12.53%
Zubiarte Inversiones Inmob, SA Barcelona (Spain) 49.83% 12.48% 49.83% 24.91%

1) Company sold in the period;

2) Company acquired or incorporated in the period;

3) Ex - Project Sierra Italy 2-Shop.Centre, Srl;

4) Ex - Project Sierra Holding Portugal I,SGPS, SA;

5) Ex - Project Sierra Holding Portugal III, SA;

6) Ex - Torino Shopping Centre Srl;

7) Ex - Corso Magenta 85, Sarl;

8) Ex - Limadarque, Retail Park, SA;

9) Ex - Parque Dom Pedro Shopping, SA.

These entities are consolidated using the proportional consolidation method.

Aggregate amounts, excluding intragroup eliminations, corresponding to the percentage of capital held in these jointly controlled companies included in the financial statements for the period, using the proportional consolidation method, can be summarised as follows:

30.09.2006 31.12.2005 30.09.2005
Non-current assets 3,501,807,920 3,076,799,370 1,692,002,259
Current assets 486,768,404 566,999,550 75,067,698
Non-current liabilities 1,614,587,744 1,416,384,042 1,177,830,777
Current liabilities 466,422,021 552,252,436 119,203,191
30.09.2006 31.12.2005 30.09.2005
Pro-forma
Income 247,697,634 219,332,169 175,267,749
Expenses 172,556,423 134,524,337 127,975,134

6. INVESTMENTS IN ASSOCIATED COMPANIES

Associated companies, their head offices and the percentage of share capital held as at 30 September 2006 and 31 December 2005 are as follows:

Percentage of capital held
30.09.2006 31.12.2005
COMPANY Head Office Direct Total Direct Total
Modelo Continente
Mundo Vip – Operadores Turísticos, SA Lisboa 33.33% 33.14% 33.33% 33.33%
Sempre a Postos - Produtos Alimentares e
Utilidades, Lda		 Lisboa 25.00% 24.85% 25.00% 24.51%
Sonae Sierra
Campo Limpo Lda S. Paulo (Brazil) 20.00% 9.32% 20.00% 5.00%
Mediterranean Cosmos Shop. Centre
Investments, SA		 Athens (Greece) 39.90% 9.98% 39.90% 9.98%
SIC Indoor – Gest. Suportes Publicitários,
SA		 Oeiras 35.00% 17.50% 35.00% 17.50%
Sonaecom
Net Mall SGPS, SA Maia 39.51% 24.40% 37.51% 24.72%
1) Profimetrics - Software Solutions, SA Maia 30.00% 18.53% - -
SIRS – Sociedade Independente de
Radiodifusão Sonora, SA		 Porto 45.00% 27.51% 45.00% 28.15%
Unipress - Centro Gráfico, Lda Vila Nova de Gaia 40.00% 24.45% 40.00% 25.02%
Sonae Capital
Andar - Sociedade Imobiliária, SA Maia 50.00% 50.00% 50.00% 50.00%
Autocenter - Serviços, Acessórios e Peças
para Viaturas, SA		 Maia 50.00% 25.00% 50.00% 25.00%
CarPlus – Comércio de Automóveis, SA Vila Nova de Gaia 100.00% 50.00% 100.00% 50.00%
Change, SGPS, SA Porto 25.00% 25.00% 25.00% 25.00%
Choice Car - Comércio de Automóveis, SA Porto 100.00% 50.00% 100.00% 50.00%
Choice Car SGPS, SA Maia 50.00% 50.00% 50.00% 50.00%
Developpement & Partenariat Assurances,
SA		 Paris (France) 35.00% 35.00% 35.00% 35.00%
Finlog - Aluguer e Comércio de
Automóveis, SA		 Matosinhos 100.00% 50.00% 100.00% 50.00%
Guerin – Rent a Car (Dois), Lda Lisboa 100.00% 50.00% 100.00% 50.00%
Interclean, SA Brazil 49.99% 12.77% 49.99% 12.77%
Lazam Corretora, Ltda Brazil 45.00% 45.00% 45.00% 45.00%
Lidergraf - Artes Gráficas, Lda Vila de Conde 25.50% 25.50% 25.50% 25.50%
Luso Assistência - Gestão de Acidentes,
SA		 Porto 100.00% 50.00% 100.00% 50.00%
Norscut - Concessionária de Scut Interior
Norte, SA		 Lisboa 25.00% 25.00% 25.00% 25.00%
Pargeste SGPS, SA Maia 40.00% 40.00% 40.00% 40.00%
Sociedade de Construções do Chile, SA Lisboa 100.00% 50.00% 100.00% 50.00%
Sociedade Imobiliária Troia - B3, SA Grândola 20.00% 20.00% 20.00% 16.96%
Vastgoed One - Sociedade Imobiliária, SA Maia 100.00% 50.00% 100.00% 50.00%
Vastgoed Sun - Sociedade Imobiliária, SA Maia 100.00% 50.00% 100.00% 50.00%
Operscut - Operação e Manutenção de
Auto-estradas, SA		 Lisboa 15.00% 15.00% 15.00% 15.00%
Sodesa, SA Lisboa 50.00% 50.00% 50.00% 50.00%
TP - Sociedade Térmica, SA Porto 50.00% 50.00% 50.00% 50.00%

1) Company acquired in the period;

Associated companies are consolidated using the equity method.

7. GROUP COMPANIES, JOINTLY CONTROLLED COMPANIES AND ASSOCIATED COMPANIES EXCLUDED FROM CONSOLIDATION AND OTHER SHAREHOLDINGS

Group companies, jointly controlled companies and associated companies excluded from consolidation, their head offices, percentage of share capital held and book value as at 30 September 2006 and 31 December 2005 are made up as follows:

Percentage of capital held
Reason 30.09.2006 31.12.2005 Book Value
COMPANY for
exclusion		 Head Office Direct Total Direct Total 30.09.2006 31.12.2005
Modelo Continente
Dispar – Distrib. de Participações, SGPS,
SA Lisboa 7.14% 7.10% 7.14% 7.00% 4,988 4,988
Insco – Insular de Hipermercados, SA Ponta Delgada 10.00% 9.94% 10.00% 9.81% 748,197 748,197
Sonae Sierra
Ercasa Cogeneracion SA Grancasa (Spain) 10.00% 1.25% 32.01% 1.60% 23,933 23,933
Sonaecom
Altitude, SGPS, SA Lisboa 11.50% 7.10% 11.50% 7.19% 1,000,000 1,000,000
Despegar.com Porto 5.50% 3.40% 5.50% 3.44% - -
Lusa - Agência de Noticias de Portugal, SA Lisboa 1.38% 0.84% 1.38% 0.86% 197,344 197,344
Minhodigital.com - Inv. na Área Tecnológ.,
SA		 Porto 4.76% 2,87% 4.76% 2.84% - -
Outsystems, Software de Rede, SA Oeiras 1.50% 0.90% 1.50% 0.90% - -
Portugal Telecom, SGPS, SA Lisboa 1.00% 0.62% - - 111,222,822 -
Sonae Capital
1) Bar-Bar-Idade Glass - Serviços de Gestão
e Investimentos, SA		 Porto 7.83% 7.83% 11.75% 11.75% 12,060,507 17,999,964
Delphinus – Soc. de Tur. e Div. de Tróia,
SA		 a) Grândola 79.00% 79.00% 79.00% 79.00% - -
3) Etablissement A. Mathe, SA France 27.74% 27.74% - - 69,350 -
Plysorol Contreplaques, SAS a) France 100.00% 100.00% 100.00% 100.00% 37,000 37,000
Sonae Indústria, SGPS, SA b) Maia 6.66% 6.66% 5.95% 5.95% 66,561,607 53,263,065
Sonae RE, SA a) Luxemburg 100.00% 100.00% 100.00% 100.00% 1,250,000 1,250,000
Fun International Entertainement, SA a) Porto 50.00% 50.00% 50.00% 50.00% 1,120,002 825,001
Infratroia – Emp. de Infraest. de Troia, E.N. a) Grândola 25.90% 25.90% 25.90% 25.90% 55,659 55,659
Net, SA Lisboa 2.80% 2.80% 2.80% 2.80% 11,132 11,132
Sear - Sociedade Europeia de Arroz, SA Santiago do Cacém 15.00% 15.00% 15.00% 15.00% 150,031 150,031
Societé Naturel de Bois Gabonais Gabon 4.24% 4.24% 4.24% 4.24% - -
Spidouro S.P.E.I. Douro e Trás-os-Montes,
SA		 Vila Real 8.30% 8.30% 8.30% 8.30% - -
Outras
Esprit du Monde SA a) Portel 100.00% 32.67% - - 50,000 -
Sonae Investimentos América Latina, Lda a) São Paulo (Brazil) 99.99% 99.99% 99.99% 99.99% 25,687 25,687
First Assur, SA France 11.01% 11.01% 11.01% 11.01% 959,647 959,647
2) Sonae Indústria, SGPS, SA b) Maia - - 0.71% 0.71% - 6,400,000

a) Group company, jointly controlled company or associated company for which, at the date of the issuance of these financial statements, complete financial information was not available;

b) Investment measured at fair value.

1) Sale of 3,92% of the share capital of the associated company in the period;

2) Company sold to Sonae Capital in the period;

3) Company acquired in the period.

8. CHANGES TO THE CONSOLIDATION PERIMETER

Main disposals of companies over the nine months period ended 30 September 2006 are as follows:

Disposals

Percentage of capital held
30.09.2006
COMPANY Head Office Direct Total
Sonae Sierra
Oriogest, Srl Milan (Italy) 80.00% 20.00%
Segest , Srl Milan (Italy) 50.00% 25.00%
Sonaecom
Enabler & Retail Consult, GmbH Germany 85.00% 37.38%
Enabler Brasil, Ltda Curitiba (Brazil) 99.99% 43.97%
Enabler France France 100.00% 43.97%
Enabler UK, Ltd U.K. 100.00% 43.97%
Enabler-Informática, SA Maia 98.50% 43.97%
Retailbox, BV Amsterdam (The
Netherlands)		 75.50% 44.64%
Sonae Capital
Sontrade Lines, Ltd Hants (U.K.) 63.75% 63.75%

Net assets of group companies sold and the corresponding carrying amounts as at the date of disposal and as at 31 December 2005 are as follows:

Net assets disposed of
Tangible and intangible assets (Note 9)
1,352,610
659,125
Deferred tax assets
7,129
66,198
Other assets
9,080,692
9,782,038
Cash and cash equivalents
4,903,819
4,972,842
Other liabilities
(6,353,057)
(8,288,804)
Provisions
(350,282)
(10,873)
8,776,864
7,044,573
Goodwill
1,936,347
1,962,882
Intercompany results
(2,990,859)
-
Minority interests (Note 18)
(925,013)
(320,259)
6,797,339
8,687,196
Gain/(loss) on sale
26,465,274
Total consideration
33,262,613
Cash received
25,946,503
Amounts receivable
7,316,110
33,262,613
Net cash inflow arising from disposals
Cash consideration received
25,946,503
Cash and cash equivalents disposed of
(4,972,842)		 Date of disposal 31.12.2005
20,973,661

The impact of these disposals on the income statement is as follows:

Date of disposal 31.12.2005
Turnover 11,725,262 23,689,831
Other operational income 3,427,304 7,897,785
Other operational expenses (13,837,767) (28,585,944)
Net financial expenses 65,553 40,523
Investment income and share of results in associated undertakings 63,376 (567,907)
Profit before taxation 1,443,728 2,474,288
Taxation (313,425) (1,174,571)
Profit for the period 1,130,303 1,299,717

9. TANGIBLE AND INTANGIBLE ASSETS

During the nine months period ended 30 September 2006, movements in Tangible and Intangible assets as well as depreciation and accumulated impairment losses, are made up as follows:

Tangible assets
Tangible Total
Land and Plant and assets Tangible
Buildings Machinery Others in progress Assets
Gross cost:
Opening balance as at 1 January 2006 1,441,897,812 1,190,596,282 280,269,665 85,169,758 2,997,933,517
Changes in consolidation perimeter - (2,378,996) (801,810) - (3,180,806)
Capital expenditure 30,424,788 4,044,681 7,920,408 219,331,954 261,721,831
Disposals (19,334,092) (7,683,688) (4,873,241) (1,364,626) (33,255,647)
Exchange rate effect 35,168 3,514 3,213 (4,020) 37,875
Transfers 48,159,414 107,434,372 9,689,193 (166,261,597) (978,618)
Closing balance as at 30 September 2006 1,501,183,090 1,292,016,165 292,207,428 136,871,469 3,222,278,152
Accumulated depreciation
and impairment losses
Opening balance as at 1 January 2006 264,496,740 630,899,802 194,131,334 271,167 1,089,799,043
Changes in consolidation perimeter - (2,060,274) (557,138) - (2,617,412)
Charge for the period 29,246,368 85,179,811 22,826,688 10,114 137,262,981
Disposals (5,396,572) (5,468,434) (4,107,135) - (14,972,141)
Exchange rate effect 1,513 1,490 1,630 - 4,633
Transfers (206,952) (2,811,257) (809,002) 834,019 (2,993,192)
Closing balance as at 30 September 2006 288,141,097 705,741,138 211,486,377 1,115,300 1,206,483,912
Carrying amount
As at 30 September 2006 1,213,041,993 586,275,027 80,721,051 135,756,169 2,015,794,240

Major amounts included in the caption Tangible assets in progress, refer to the following projects:

30.09.2006
Refurbishment and expansion of stores located in Portugal 54,946,491
New projects in Portugal of the Retail business segment 18,908,806
Troia project 20,265,214
Deployment of mobile and fixed network 9,066,824
103,187,335
Intangible assets
Intangible Total
Patents and other assets Intangible
similar rights Others in progress Assets
Gross cost:
Opening balance as at 1 January 2006 230,752,504 281,456,631 15,469,653 527,678,788
Changes in consolidation perimeter (31,018) (376,701) - (407,719)
Capital expenditure 426,643 1,122,436 25,196,977 26,746,056
Disposals (6,855) (182,264) (490,754) (679,873)
Exchange rate effect 9 592 - 601
Transfers 2,166,049 12,804,442 (10,938,679) 4,031,812
Closing balance as at 30 September 2006 233,307,332 294,825,136 29,237,197 557,369,665
Accumulated depreciation
and impairment losses
Opening balance as at 1 January 2006 23,481,840 182,651,525 - 206,133,365
Changes in consolidation perimeter (22,345) (351,323) - (373,668)
Charge for the period 10,806,248 19,548,774 - 30,355,022
Disposals (23,713) (11,495) - (35,208)
Exchange rate effect - 266 - 266
Transfers 558,040 2,145,669 - 2,703,709
Closing balance as at 30 September 2006 34,800,070 203,983,416 - 238,783,486
Carrying amount
As at 30 September 2006 198,507,262 90,841,720 29,237,197 318,586,179

As at 30 September 2006, the amount under the caption Patents and other similar rights includes net assets related with UMTS technology (118,191,153 euro) and the fair value attributed to a group of brands with indefinite useful lives, among which the "Continente" brand (75,000,000 euro).

10. INVESTMENT PROPERTIES

Investment properties are recorded at fair value. These assets are owned by the shopping centres business and as such are consolidated using the proportional method.

As at 30 September 2006, Investment properties are detailed as follows:

30.09.2006 31.12.2005
Investment properties in operation 1,330,860,489 1,232,476,111
Investment properties in progress 182,460,806 124,944,974
1,513,321,295 1,357,421,085

As at 30 September 2006, Investment properties in operation correspond to the fair value of the Group's share of shopping centres, which can be detailed as follows:

30.09.2006 31.12.2005
Amount
Yield		 Amount Yield
Portugal 793,968,000 5.75% to 6.75% 718,685,026 6.25% to 7.25%
Spain 369,696,649 5.25% to 7.25% 357,728,006 5.25% to 7.50%
Italy 60,250,500 6.25% to 7.25% 58,257,500 6.50% to 7.50%
Brazil 106,945,340 11.00% to 12.50% 97,805,579 11.00% to 12.50%
1,330,860,489 1,232,476,111

The fair value of each investment property was determined by a valuation as at 30 June 2006, performed by an independent entity, based on valuation criteria generally accepted in the real estate business.

Value created on investment properties over the nine months periods ended 30 September 2006 and 2005 can be detailed as follows:

9 Months 2005
9,654,936
51,481,784
(3,790,747)
57,345,972

As at 30 September 2006 and 31 December 2005, Investment properties in progress can be detailed as follows:

30.09.2006 31.12.2005
Portugal:
Alverca 2,858,800 2,838,625
Cacém Shopping 920,548 875,176
Parque de Famalicão 1,496,742 1,427,234
Setubal Retail Park 784,657 736,764
Lima Retail Park 2,557,773 2,148,968
Torres Colombo 4,113,358 4,271,352
Rio Sul - 16,534,179
VIII Avenida 6,831,625 -
ArrabidaShopping - expantion 2,194,373 -
CaiscaisShopping - expantion 1,148,097 131,760
Others 3,740,928 473,759
Germany:
Alexander Platz 49,268,570 36,016,961
3DO 9,969,018 7,932,227
Weiterstadt 28,374,175 -
Others 6,542 -
Brazil:
Others 194,270 114,655
Spain:
El Rosal 26,477,536 20,337,249
Plaza Mayor Shopping 9,620,653 6,319,577
Dos Mares - expantion 1,815,902 1,650,387
Others 1,444,525 -
Greece:
Aegean Park 4,769,825 4,725,071
Park Avenue 952,992 -
Others 11,005 10,160
Italy:
Freccia Rossa 17,243,312 13,930,831
Gli Orsi 4,841,020 4,071,824
Le Terraze 764,949 -
Others 59,611 398,219
182,460,806 124,944,974

As at 30 September 2006, the following investment properties were mortgaged:

3DO La Farga
Airone El Rosal
Alexander Platz Loureshopping
Algarveshopping Luz del Tajo
Arrabidashopping Madeirashopping
Avenida M40 Maiashopping
Cascaishopping Norteshopping
Centro Colombo Parque Atlântico
Centro Vasco da Gama Parque Principado
Coimbrashopping Plaza Éboli
Dos Mares Plaza Mayor
Estação Viana Plaza Mayor Shopping
Freccia Rossa Rio Sul
Gaiashopping Serra Shopping
Grancasa Valecenter
Guimarãeshopping Valle Real
Kareaga Viacatarina
Zubiarte

11. GOODWILL

During the nine months period ended 30 September 2006, movements in goodwill, as well as in corresponding impairment losses, are as follows:

30.09.2006
Gross value:
Opening balance 248,887,726
Increases 2,724,882
Decreases (2,467,235)
Closing balance 249,145,373
Accumulated impairment
losses:
Opening balance 3,309,480
Increases 4,236,492
Decreases -
Closing balance 7,545,972
Carrying amount: 241,599,401

Goodwill is not depreciated. Impairment tests are performed on an annual basis.

12. INVESTMENTS

As at 30 September 2006, this caption is made up as follows:

30.09.2006
Non current Current
Investments in group companies, jointly controlled companies
or associated companies excluded from consolidation
Opening balance as at 1 January 2006 8,795,694 -
Acquisitions in the period 1,074,850 -
Disposals in the period (500) -
Transfers 2,659,730
Closing balance as at 30 September 2006 12,529,774 -
Accumulated impairment losses (Note 24) (7,957,738) -
4,572,036 -
Investment in associated companies
Opening balance as at 1 January 2006 21,254,852 -
Acquisitions in the period 2,364,162 -
Disposals in the period - -
Equity method effect 3,174,499 -
Transfers (2,526,873) -
Closing balance as at 30 September 2006 24,266,640 -
Goodwill 2,958,551
Accumulated impairment losses (Note 24) (844,140) -
26,381,051 -
Investments held for sale
Fair value (net of impairment losses) as at 1 January 2006 133,421,347 10,620,966
Acquisitions in the period 117,466,246 1,905,353
Disposals in the period (17,409,488) (874,547)
Increase/(Decrease) in fair value 12,827,273 (33,065)
Transfers (147,368) 335,732
Fair value (net of impairment losses) as at 30 September 2006 246,158,010 11,954,439
Derivative financial instruments (Note 20)
Fair value as at 1 January 2006 - 60,475
Acquisitions in the period - 2,578,067
Disposals in the period - (2,591,934)
Increase/(Decrease) in fair value - 20,579
Fair value as at 30 September 2006 - 67,187
277,111,097 12,021,626

Investments held for sale are disclosed above net of accumulated impairment losses (Note 24) amounting to 2,740,070 euro.

The caption Investments held for sale includes (64,322,740) euro of deposits in an Escrow Account, of which (10,628,802) disclosed as current assets and (53,689,586) euro as non-current assets, in accordance with the time schedule of the guarantee. Amounts in the escrow account are invested in investment funds with high ratings.

13. OTHER NON-CURRENT ASSETS

As at 30 September 2006 and 31 December 2005, Other non-current assets are detailed as follows:

30.09.2006
31.12.2005
Accumulated
Accumulated
impairment
Carrying
impairment
Gross Value
losses (Note 24)
Amount
Gross Value
losses
Loans granted to related parties
6,402,717
-
6,402,717
12,000,000
-
Bar-Bar-Idade Glass - Serviç. de Gest. e Investiment, SA
Andar - Sociedade Imobiliária, SA
2,853,673
-
2,853,673
2,650,673
-
Others
4,136,943
(270,488)
3,866,455
4,416,301
(294,805)
13,393,333
(270,488)
13,122,845
19,066,974
(294,805)
Trade accounts receivable and other debtors
Legal deposits
737,438
-
737,438
823,385
-
Accounts receivable from the sale of investments
1,399,509
-
1,399,509
1,911,424
-
Lisbon and Malaga Town Councils
4,400,585
-
4,400,585
4,723,019
-
Others
7,549,261
(184,944)
7,364,317
12,243,096
(4,722,917)
14,086,793
(184,944)
13,901,849
19,700,924
(4,722,917)
Carrying
Amount
12,000,000
2,650,673
4,121,496
18,772,169
823,385
1,911,424
4,723,019
7,520,179
14,978,007
Derivative financial instruments (Note 20)
2,542,596
-
2,542,596
-
-		 -
Other non-current assets
775,889
-
775,889
1,988,844
-		 1,988,844
30,798,611
(455,432)
30,343,179
40,756,742
(5,017,722)		 35,739,020

14. TRADE DEBTORS AND OTHER CURRENT ASSETS

As at 30 September 2006 and 31 December 2005 , Trade debtors and other current assets are detailed as follows:

30.09.2006 31.12.2005
Trade accounts receivable 348,488,315 340,892,988
Taxes recoverable 99,897,599 87,636,005
Securitisation of trade receivables 1,425,473 1,684,510
Trade suppliers - debit balances 34,188,301 32,445,023
Other debtors 67,391,581 86,267,475
Accounts receivable from the sale of investments 24,093,558 260,410,243
Accounts receivable from the sale of tangible assets 2,994,545 4,336,373
Loans granted to associated companies 32,005,384 19,758,938
Invoices to be issued 55,888,065 37,549,383
Other current assets 55,818,520 28,026,710
722,191,341 899,007,648
Accumulated impairment losses (Note 24) (106,136,124) (110,306,224)
616,055,217 788,701,424

15. DEFERRED TAXES

Deferred tax assets and liabilities as at 30 September 2006 and 31 December 2005 can be detailed as follows, split between the different types of temporary differences:

Deferred tax assets Deferred tax liabilities
30.09.2006 31.12.2005 30.09.2006 31.12.2005
Difference between fair value and acquisition cost in investment properties - - 228,748,649 200,453,376
Harmonisation adjusments 211,359 282,358 25,106,533 24,696,174
Provisions and impairment losses not accepted for tax purposes 13,459,079 13,201,778 2,560,614 2,560,614
Write off of tangible and intangible assets 27,406,061 28,640,493 - -
Write off of deferred costs 31,144,893 23,436,106 3,731,225 2,067,858
Valuation of hedging derivatives 102,322 320,595 775,449 16,631
Revaluation of tangible assets - - 3,660,995 3,838,774
Tax losses carried forward 37,392,458 42,886,889 - -
Reinvested capital gains/(losses) - - 4,411,342 4,485,183
Others (401,489) (284,180) 395,431 65,651
109,314,683 108,484,039 269,390,238 238,184,261

In accordance with the tax statements and tax estimates presented by companies that recorded deferred tax assets arising from tax losses carried forward, as at 30 September 2006 and 31 December 2005, and using exchange rates effective at that time, tax losses carried forward can be summarised as follows:

30.09.2006 31.12.2005
Tax losses carried
forward		 Deferred tax assets Time limit Tax losses carried
forward		 Deferred tax assets Time limit
With limited time use
Generated in 2000 555,914 142,845 2006 1,860,520 464,590 2006
Generated in 2001 5,756,452 1,568,720 2007 7,365,362 2,010,374 2007
Generated in 2002 24,273,386 6,678,697 2008 61,090,945 16,727,473 2008
Generated in 2003 33,355,143 9,239,172 2009 32,257,714 9,013,529 2009
Generated in 2004 3,805,597 1,047,487 2010 5,295,699 1,317,769 2010
Generated in 2005 10,406,515 2,870,649 2011 10,614,908 2,926,903 2011
Generated in 2006 12,232,984 3,302,460 2012 - -
90,385,991 24,850,030 118,485,148 32,460,638
Without limited time use 13,583,488 4,521,168 9,122,035 3,250,519
With a time limit different from the above mentioned 22,918,224 8,021,260 20,502,091 7,175,732
36,501,712 12,542,428 29,624,126 10,426,251
126,887,703 37,392,458 148,109,274 42,886,889

As at 30 September 2006 and 31 December 2005, Deferred tax assets resulting from tax losses carried forward were re-assessed against each company's business plans, which are regularly updated, and available tax planning opportunities. Deferred tax assets have only been recorded to the extent that future profits will arise which may be offset against available tax losses or against deductible temporary differences.

As at 30 September 2006 tax losses carried forward, amounting to 1,270,565,337 euro, have not originated deferred tax assets for prudential reasons. These may be summarised as follows:

30.09.2006 31.12.2005
Tax losses carried
forward		 Deferred tax assets Time limit Tax losses carried
forward		 Deferred tax assets Time limit
With limited time use
Generated in 2000 58,847,304 16,183,010 2006 67,743,331 18,629,417 2006
Generated in 2001 108,964,674 29,958,942 2007 125,518,521 34,517,593 2007
Generated in 2002 526,718,282 144,761,375 2008 679,213,519 186,783,717 2008
Generated in 2003 66,713,917 18,890,848 2009 65,091,201 18,520,346 2009
Generated in 2004 41,810,641 11,427,460 2010 41,053,702 11,326,503 2010
Generated in 2005 261,606,099 71,935,112 2011 229,033,258 62,990,282 2011
Generated in 2006 46,857,553 12,882,653 2012 - -
1,111,518,470 306,039,400 1,207,653,532 332,767,858
Without limited time use 159,046,867 47,473,099 133,678,160 46,113,016
1,270,565,337 353,512,499 1,341,331,692 378,880,874

16. CASH AND CASH EQUIVALENTS

As at 30 September 2006 and 31 December 2005, Cash and cash equivalents can be detailed as follows:

30.09.2006 31.12.2005
Cash at hand 4,074,761 2,799,622
Bank deposits 98,788,149 795,834,935
Treasury applications 98,439,352 113,659,759
Cash and cash equivalents in the balance sheet 201,302,262 912,294,316
Bank overdrafts (Note 19) (22,234,011) (18,673,265)
Cash and cash equivalents in the statement of cash flows 179,068,252 893,621,051

Bank overdrafts are disclosed in the balance sheet under Current bank loans.

17. SHARE CAPITAL

As at 30 Setembro 2006, the share capital, which is fully subscribed and paid for, is made up of 2,000,000,000 ordinary shares, which do not have the right to a fixed remuneration, with a nominal value of 1 euro each. As at that date, the company and group companies held 133,418,572 own shares, at a cost of 142,961,431 euro.

As at 30 September 2006, the following entities held more than 20% of the subscribed share capital:

Entity %

Efanor Investimentos, SGPS, SA and associated companies 52.94

18. MINORITY INTERESTS

Movements in minority interests in the nine months period ended 30 September 2006 are as follows:

30.09.2006
Opening balance as at 1 January 394,707,612
Increased shareholding by acquisitions (20,307,225)
Dividends (4,525,759)
Changes resulting from currency translation 43,251
Acquisition of companies -
Disposal of companies (Note 8) (925,013)
Changes in hedge and fair value reserves 800,182
Others (3,853,350)
Profit for the period attributable to minority interests 62,808,694
Closing balance as at 30 September 428,748,392

19. BORROWINGS

As at 30 September 2006 and 31 December 2005, Borrowings are made up as follows:

30.09.2006 31.12.2005
Outstanding amount Outstanding amount
Amount limit Current Non Current Amount limit Current Non Current Repayable on
Bank loans
Sonae, SGPS, SA - commercial paper 350,000,000 32,500,000 - 350,000,000 340,950,000 - Aug/2014
Modelo Continente, SGPS,SA - commercial paper 163,000,000 - - - - Sep/2009
a)b) Filiais da Sonae Sierra 474,037,488 13,219,734 347,202,756 480,737,488 9,933,335 363,688,431 Jan/2007 to
May/2027
a)c) Filiais da Sonae Sierra 286,750,649 3,343,193 252,249,067 265,528,904 10,336,188 144,467,761 May/2010 to
Dec/2025
Valecenter S.p.a. - - 26,000,000 26,000,000 - -
Optimus 450,000,000 - 324,458,200 450,000,000 - 324,458,200 Jun/2009
Sonae Investments BV 32,154,000 6,150,940 6,150,940 32,154,000 6,150,940 10,764,146 Sep/2008
Sonae Investments BV 47,385,800 4,580,000 47,385,800 - - Jun/2007
d)
Imoareia		 34,791,153 - - 34,791,153 34,791,153 - Sep/2006
e) Sonae Turismo - commercial paper 110,000,000 35,100,000 - - - Aug/2009
Others 9,782,368 50,579,605 145,316,357 68,714,745
104,676,234 980,640,569 573,477,973 912,093,283
Bonds:
Bonds Sonae / 97 74,819,686 74,819,684 74,819,686 74,819,684 Oct/2007
Bonds Sonae / 05 - 100,000,000 - 100,000,000 Mar/2013
Bonds Sonae 2006/2011 - 250,000,000 - - May/2011
Bonds Modelo Continente / 2003 - 82,000,000 - 82,000,000 Oct/2011
Bonds Modelo Continente / 2004 - 100,000,000 - 100,000,000 Mar/2009
Bonds Modelo Continente / 2005 - 265,000,000 - 265,000,000 Aug/2010
Bonds Modelo Continente / 2005 - 150,000,000 - 150,000,000 Aug/2012
Bonds Sonae Imobiliária / 99 15,000,000 15,000,000 - Dec/2006
Bonds Sonaecom / 2005 - 150,000,000 - 150,000,000 Jun/2013
89,819,686 1,171,819,685 89,819,686 921,819,684
Obligations under finance leases 8,248,636 30,030,961 11,030,610 36,194,019
Other loans 228,907 7,903,303 1,082,647 8,164,831
Bank overdrafts (Note 16) 22,234,011 - 18,673,265 -
Hedging derivatives (Note 20) 163,287 277,639 959,050 481,953
Amortised cost for bank loans and bonds (476,092) (26,320,557) (550,705) (30,127,628)
224,894,669 2,164,351,600 694,492,525 1,848,626,142

a) These amounts are proportionate considering the percentage held by the group;

b) These loans are guaranteed by mortgages of investment properties held by these affiliated companies;

c) These loans are guaranteed by a pledge of shares held in those affiliated companies;

d) This loan is guaranteed by Sonae, SGPS, SA;

e) Sonae Capital, SGPS, SA ia a co-guarantor in this loan.

Derivatives are recorded at fair value (Note 20).

The repayment schedule of the nominal value of borrowings may be summarised as follows:

30.09.2006 31.12.2005
2006 166,122,638 694,084,181
2007 184,586,661 144,560,638
2008 127,970,728 126,167,422
2009 349,967,816 349,217,525
2010 334,417,765 333,764,184
After 2010 1,252,536,384 924,562,049
2,415,601,993 2,572,355,997

20. DERIVATIVES

Exchange rate derivatives

The Group uses exchange rate derivatives, essentially to hedge future cash flows.

The Group contracted several exchange rate forwards and options in order to manage its exchange rate exposure.

As at 30 September 2006, the fair value of exchange rate derivatives, calculated based on present market value of equivalent financial instruments, is of 26,079 euro and is included in Current liabilities and 46,608 euros (60,475 euro as at 31 December 2005) on the caption Current investments.

Losses in the period arising from changes in the fair value of instruments that do not qualify for hedging accounting treatment, amounting to -39,946 euro, were recorded directly in the income statement in the caption Net financial expenses.

Interest rate derivatives

As at 30 September 2006, derivatives used by the Group essentially refer to "swaps" and interest rate options ("cash flow hedges"). These were negotiated to hedge the interest rate risk of loans amounting to 346,408,172 euro (255,692,090 euro as at 31 December 2005). The fair value of these derivatives amounts to 2,148,328 euro (-1,441,003 euro as at 31 December 2005), and are disclosed as Investments 2,563,175 euro and as current liabilities 414,847 euro, of which 20,579 euro relate to assets and 51,732 euro (454.221 euro as at 31 December 2005) relate to derivatives on loans which no longer qualify as hedge derivatives, in spite of continuing to hedge interest risk.

These interest rate derivatives are valued at fair value, at the balance sheet date, based on valuations performed by the Group using specific software and on external valuations when this software does not deal with specific instruments. The fair value of swaps was calculated, as at the balance sheet date, based on the discounted cash flow of the difference between the fixed interest rate of the fixed leg and the indexed variable interest rate inherent to the variable leg. The calculation of the fair value of options was based on the "Black-Scholes" and similar models.

The hedging principles used by the Group when negotiating these financial derivatives are as follows:

  • Perfect "matching" between cash in-flows and out-flows, i.e., rate setting dates of bank loans coincide with those of the interest rate derivative;
  • Perfect "matching" of indices used: the index of the hedging derivative and that of the related loan are the same;
  • In a scenario of an extreme increase in interest rates, the maximum financing cost is limited.

Counterparts issuing derivative financial instruments are selected based on financial strength and credit risk established by internationally recognised rating agencies. These counterparts are nationally and internationally recognised first class financial institutions.

Interest rate and exchange rate derivatives

As at 30 September 2006 no contracts existed related to interest rate and exchange rate derivatives.

Fair value of derivatives

The fair value of derivatives is detailed as follows:

Investments Borrowings
30.09.2006 31.12.2005 30.09.2006 31.12.2005
Derivatives not qualified as hedging 67,187 60,475 77,811 454,221
Hedging derivatives
Exchange rate - - - -
Interest rate 2,542,596 - 363,115 986,782
Interest and exchange rate - - - -
Other derivatives - - - -
2,609,783 60,475 440,926 1,441,003

21. OTHER NON-CURRENT LIABILITIES

As at 30 September 2006 and 31 December 2005, Other non-current liabilities were made up as follows:

30.09.2006 31.12.2005
Shareholder loans 39,513,852 50,411,714
Fixed assets suppliers 23,403,339 25,410,132
Other non-current liabilities
Share based payments (Note 22)		 34,136,223
17,107,562		 481,162,419
29,428,569
114,160,976 586,412,834

The caption Other non-current liabilities included 460,085,361 euro as at 31 December 2005 which corresponded to the present value of the consideration paid by the Santander Group for Modelo Continente, SGPS, SA shares.

On 9 May 2002, the company sold shares representing 19.95% of the share capital of its affiliated company Modelo Continente, SGPS, S.A. to Banco Santander Central Hispano and related companies (the Santander Group). This sale was part of agreements entered into with the Santander Group on 8 February 2002 to launch a tender offer for the whole of the share capital of that affiliated company not yet owned by Sonae, and the sales price per share was the offer price (1.85 euro).

At the same time, agreements with the Santander Group were signed, giving Sonae an option to repurchase the shares mentioned in the previous paragraph (open to be exercised during 4 years by an affiliated company appointed on 16 December 2002 for that purpose) and the Santander Group an option to sell them (open between the end of the 3rd year up to the end of the 4th year to be exercised by an affiliated company appointed on 16 December 2002 for that purpose). The share prices for these options are specified in the agreements and are indexed to the sales price and to financial variables.

In January 2003 the Santander Group subscribed shares representing 5.7% of the capital increase of Modelo Continente, SGPS, SA, under the same contractual arrangements. Consequently, the Santander Group changed its shareholding to 18.65% of the share capital of this company.

On 16 November 2004, the agreements mentioned above were renegotiated including a portion of the Modelo Continente, SGPS, S.A. shares acquired during the year. Consequently, as at 31 December 2004, the Santander Group held 30% of the share capital of that affiliated company.

The terms of the renegotiation maintained the share call option held by Sonae over the shares owned by the Santander Group which can be exercised at any moment, as well as the put option held by the Santander Group which can only be exercised after 30 November 2008. The share prices for these options are specified in the agreements and are indexed to the sales price and to financial variables.

On 19 May 2005, in an over the counter transaction, Sonae, SGPS, SA acquired 83,375,000 shares (7.58% of the share capital) of its affiliate Modelo Continente, SGPS, SA, for 150.4 million euro, under the terms of the Call Option contract signed on 16 November 2004.On 20 April 2006, the Group acquired, under the same terms, shares representing 13.3295% of the share capital of its affiliate Modelo Continente, SGPS, SA for 265,792,158.65 euro. On 9 Sptember 2006, the Group acquired, under the same terms, shares representing 9.09% of the share capital of Modelo Continente, SGPS, SA, corresponding to the remaining shares held by the Santander Group under this contract, which as a result ceased to exist.

22. SHARE-BASED PAYMENTS

In 2006 and in previous years, the Sonae Group granted deferred performance bonuses to its directors and eligible employees. These are either based on shares to be acquired at nil cost, three years after they were attributed to the employee, or based on share options with the exercise price equal to the share price at the grant date, to be exercised three years later. In both cases, the acquisition can be exercised during the period commencing on the third anniversary of the grant date and the end of that year. The company has the choice to settle in cash instead of shares. The option can only be exercised if the employee still works for the Group on the vesting date.

As at 30 September 2006 and 31 December 2005, the market value of total liabilities arising from share-based payments, which have not yet vested, may be summarised as follows:

Year of Vesting Number of Fair value
grant year participants 30.09.2006 31.12.2005
Shares
2003 2006 11 1,092,254 15,973,503
2004 2007 428 11,591,149 9,654,065
2005 2008 453 10,046,799 8,446,941
2006 2009 493 8,048,615 -
30,778,817 34,074,509
Options
2002 2005 - - 4,203,376
2003 2006 50 - -
2004 2007 - - -
2005 2008 - - -
2006 2009 - - -
- 4,203,376
Total 30,778,817 38,277,885

As at 30 September 2006 the financial statements include the following amounts corresponding to the period elapsed between the date of granting and those dates for each deferred bonus plan, which has not yet vested:

30.09.2006
Staff costs 11,682,077
Retained earnings 7,896,109
19,578,186
Other current liabilities 2,470,624
Other non-current liabilities 17,107,562
19,578,186

The movement in the number of options open in the nine months period ended 30 September 2006 is as follows:

30.09.2006
Opening balance 2,406,224
Granted in the period -
Exercised in the period (1,467,859)
Expired and not exercised in the period (14,691)
Closing balance 923,674

Options are only granted on Sonaecom shares, and may be summarised as follows:

Vesting date 2004 2005 2006 2007 2008 Total
Exercisable until: 31.03.05 31.03.06 31.03.07 31.03.08 31.03.09
Exercise price (defined at date of grant) 3.014 € 1.694 € - - -
Total liability - - - - - -
Recorded liability - - - - - -
Number of options open - 923,674 - - - 923,674
Number of options exercised in the period (285,406 ) (1,182,453 ) - - - (1,467,859 )
Number of options expired but not
exercised in the period		 - (14,691 ) - - - (14,691 )
Average market-price of options exercised
in the period		 4.087 € 4.199 €

23. TRADE CREDITORS AND OTHER NON-CURRENT LIABILITIES

As at 30 September 2006 and 31 December 2005, Trade creditors and other non-current liabilities were made up as follows:

30.09.2006 31.12.2005
Trade creditors 765,663,865 808,680,981
Shareholders 29,491,133 29,107,161
Fixed asset suppliers 60,800,291 79,751,868
Other accounts payable 72,891,975 68,104,841
Factoring 19,478,786 18,282,079
Taxes and contributions payable 57,815,467 69,814,568
Holiday Pay and Bonuses 105,491,966 98,573,788
Accrued expenses 167,480,208 136,005,259
Deferred income 44,401,294 38,458,931
1,323,514,985 1,346,779,476

24. PROVISIONS AND ACCUMULATED IMPAIRMENT LOSSES

Movements in Provisions and impairment losses over the nine months period ended 30 September 2006 are as follows:

Balance as at Balance as at
31.12.2005 Increase Decrease 30.09.2006
Accumulated impairment losses on investments (Note 12) 11,571,901 116,297 (146,250) 11,541,948
Accumulated impairment losses on other non-current assets (Note 13) 5,017,722 143,000 (4,705,290) 455,432
Accumulated impairment losses on trade accounts receivable and other debtors
(Note 14)		 110,306,224 7,849,243 (12,019,343) 106,136,124
Accumulated impairment losses on stocks 25,230,922 10,416,795 (11,074,582) 24,573,135
Non-current provisions 54,477,919 12,924,615 (3,998,716) 63,403,818
Current provisions 2,284,983 635,545 (624,647) 2,295,881
208,889,671 32,085,495 (32,568,828) 208,406,339

Impairment losses are deducted from the book value of the corresponding asset.

25. CONTINGENT ASSETS AND LIABILITIES

As at 30 September 2006 and 31 December 2005, Contingent assets and liabilities were made up as follows:

30.09.2006 31.12.2005
Guarantees given:
on tax claims 67,958,248 64,279,059
on judicial claims 4,648,827 2,135,699
others 185,906,110 265,851,124

Others include 68,098,396 euro related to guarantees on construction works given to clients.

As at 31 December 2005, shares representing 31.83% of the share capital of Modelo Continente, SGPS, S.A. were pledged to the Santander Group as part of the contractual obligations arising from the call and put option agreements on Modelo Continente's shares.This pledge was cancelled as a result of the exercise of the related purchase option (Note 21).

26. RELATED PARTIES

Balances and transactions with related parties are detailed as follows:

Sales and services rendered Purchases and services obtained
Transactions 30.09.2006 30.09.2005 30.09.2006 30.09.2005
Parent company and group companies excluded from
consolidation		 33,523,392 20,457,052 561,834 10,293,040
Jointly controlled companies 27,976,927 11,086,598 11,593,009 830,183
Associated companies 1,458,864 1,632,404 14,778,916 5,796,184
Other partners in Group companies 50,237,243 - 12,106,488 1,716,567
113,196,426 33,176,054 39,040,247 18,635,974
Interest income Interest expenses
Transactions 30.09.2006 30.09.2005 30.09.2006 30.09.2005
Parent company and group companies excluded from
consolidation
Jointly controlled companies		 6,859
110,945		 409,794
173,989		 70,874
693,378		 37,932
41,358
Associated companies 24,605 48,031 - -
Other partners in Group companies - 368,376 1,848,403 3,167,250
142,409 1,000,190 2,612,655 3,246,540
Accounts receivable Accounts payable
Balances 30.09.2006 31.12.2005 30.09.2006 31.12.2005
Parent company and group companies excluded from
consolidation		 12,342,753 12,640,910 955,801 367,578
Jointly controlled companies 13,446,878 29,268,146 4,966,004 3,757,773
Associated companies 8,916,222 6,929,214 1,782,206 2,283,497
Other partners in Group companies 11,448,229 9,553,739 14,084,630 13,688,689
46,154,082 58,392,009 21,788,641 20,097,537
Loans
Obtained Granted
Balances 30.09.2006 31.12.2005 30.09.2006 31.12.2005
Parent company and group companies excluded from
consolidation
Jointly controlled companies		 2,750,000
24,595,536		 2,750,000
23,133,138		 12,407,524
21,950		 2,208,335
1,254,924
Associated companies - - 4,668,960 20,129,907

27. TAXATION

As at 30 September 2006 and 31 December 2005, Taxation is made up as follows:

30.09.2006 30.09.2005 30.09.2005
3rd Quarter 9 Months 3rd Quarter
Pro-forma		 9 Months
Pro-forma		 3rd Quarter 9 Months
Current tax 7,319,770 19,391,429 5,932,797 20,383,114 9,511,149 31,546,829
Deferred tax 6,104,490 27,985,280 2,905,543 10,930,049 2,584,848 31,752,707
13,424,260 47,376,709 8,838,340 31,313,163 12,095,997 63,299,536

28. EARNINGS PER SHARE

Earnings per share for the nine months period, excluding the effect of discontinuing operations, were calculated taking into consideration the following amounts:

55,677,078 62,693,063 17,098,434 23,593,166

30.09.2006 30.09.2005 30.09.2005
3rd Quarter 9 Months 3rd Quarter
Pro-forma		 9 Months
Pro-forma		 3rd Quarter 9 Months
Net profit
Net profit taken into consideration to calculate
basic earnings per share (Net profit for the nine
months period attributable to equity holders of
Sonae)		 37,668,538 122,742,052 27,083,192 111,348,242 29,157,750 193,814,537
Effect of dilutive potential shares
Interest related to convertible bonds (net of tax) - - - - - -
Net profit taken into consideration to calculate
diluted earnings per share:		 37,668,538 122,742,052 27,083,192 111,348,242 29,157,750 193,814,537
Number of shares
Weighted average number of shares used to
calculated basic earnings per share		 1,866,581,428 1,866,178,736 1,866,023,854 1,865,928,829 1,866,023,854 1,865,928,829
Effect of dilutive potential ordinary shares
from convertible bonds - - - - - -
Weighted average number of shares used to
calculated diluted earnings per share		 1,866,581,428 1,866,178,736 1,866,023,854 1,865,928,829 1,866,023,854 1,865,928,829
Earnings per share (basic and diluted) 0.020180 0.065772 0.014514 0.059674 0.015626 0.103870

There are no convertible instruments included in Sonae, SGPS shares, hence there is no dilutive effect.

29. DIVIDENDS

In the Shareholders Annual General Meeting held on 6 April 2006, payment of a gross dividend of 0.025 euro per share (0.02 euro per share in 2005) was approved. This was paid on 5 May 2006, the total amount attributed being 46,650,596.35 euro (37,316,439.58 euro in 2005).

30. SEGMENT INFORMATION

In 2006 and 2005, the following were identified as primary business segments:

  • Retailing
  • Shopping Centres

  • Telecommunications

  • Others

The contribution of the business segments to the income statement for the nine months periods ended on 30 September 2006 and 2005 can be detailed as follows:

30 September 2006 Shopping Other Consolidation
Retail Centres Telecomm. Segments Adjustments Total Operations
Operational income
Sales 2,096,247,471 - 60,299,539 143,301,543 - 2,299,848,553
Services rendered 98,077,280 101,287,605 547,134,821 110,796,393 - 857,296,099
Other operational income 144,881,918 86,605,994 24,851,238 108,617,982 (6,736,691) 358,220,442
2,339,206,669 187,893,599 632,285,599 362,715,918 (6,736,691) 3,515,365,093
Inter-segment income 44,339,087 4,404,252 2,095,405 7,766,925 (58,605,669) -
2,383,545,756 192,297,851 634,381,004 370,482,843 (65,342,360) 3,515,365,093
Operational cash-flow (EBITDA) 157,880,708 125,215,937 132,231,643 3,570,804 (2,762,938) 416,136,154
Operational profit (EBIT) 101,257,488 123,492,980 25,664,484 (868,535) (6,667,449) 242,878,968
Net profit for the period 93,188,078 77,182,695 38,194,059 62,751,952 (85,766,039) 185,550,746
- attributable to equity holders of Sonae 122,742,052
- attributable to minority interests 62,808,694
30 September 2005 Retail Shopping Telecomm. Other Consolidation Pro-forma
Centres Segments Adjustments
Operational income
Sales 1,920,634,388 - 64,614,779 136,065,754 - 2,121,314,921
Services rendered 9,677,487 92,999,836 544,495,671 181,688,474 - 828,861,468
Other operational income 137,899,551 37,147,265 20,575,566 102,374,093 (2,725,351) 295,271,124
2,068,211,425 130,147,101 629,686,016 420,128,321 (2,725,351) 3,245,447,513
Inter-segment income 42,112,361 4,097,235 9,075,033 9,438,414 (64,723,043) -
2,110,323,786 134,244,336 638,761,049 429,566,735 (67,448,394) 3,245,447,513
Operational cash-flow (EBITDA) 136,161,162 75,306,474 129,996,088 9,651,946 (5,918,821) 345,196,849
Operational profit (EBIT) 86,654,144 69,149,450 28,442,169 4,805,153 (2,055,775) 186,995,141
Net profit for the period 56,874,161 50,625,578 11,173,983 55,125,937 (18,605,001) 155,194,659
- attributable to equity holders of Sonae
111,348,242
- attributable to minority interests 43,846,417

31. SUBSEQUENT EVENTS

On 16 October 2006, following the registration with the Commercial Registration Office of the acquisition of all of the shares in Modelo Continente, SGPS, SA, Sonae became, together with a wholly-owned subsidiary, the holder of 100% of the share capital of Modelo Continente, SGPS, SA.

On 18 October 2006 the notary deed was signed for the share capital increase of Sonaecom, SGPS, SA from 296,526,868 euro to 366,246,868 euro, through the issuance of 69,720,000 new shares, each with a nominal value of 1 euro and with a corresponding total share premium of 275,657,217 euro, subscribed by 093X - Telecomunicações Celulares, SA and Parpública - Participações Públicas, SGPS, SA by means of contribution of their respective shareholdings, including supplementary capital, in Optimus - Telecomunicações, SA.

On 20 October 2006, Sonae Sierra, SGPS, SA signed an agreement to sell 50% of the share capital of Sonae Sierra Brazil, BV at a price of 150 million dolares (118,8 million euro using the exchange rate as at 30 September 2006). Once the transation is complete, Sonae Sierra will hold 50% of the share capital of this affiliated company.

32. APPROVAL OF THE FINANCIAL STATEMENTS

The accompanying consolidated financial statements were approved by the Board of Directors on 9 November 2006.

INDIVIDUAL FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2006

BALANCE SHEETS AS AT 30 SEPTEMBER 2006 AND 31 DECEMBER 2005

(Amounts expressed in euro)

IFRS
ASSETS Notes 30.09.2006 31.12.2005
NON-CURRENT ASSETS:
Tangible and intangible assets 161,363 338,581
Investments 4 3,085,260,383 3,002,481,945
Other non-current assets 5 883,513,599 499,617,624
Total Non-Current Assets 3,968,935,345 3,502,438,150
CURRENT ASSETS:
Trade account receivables and other current assets 6 75,473,982 241,457,553
Investments held for trading - 5,707,400
Cash and cash equivalents 7 86,306 197,441,606
Total Current Assets 75,560,288 444,606,559
TOTAL ASSETS 4,044,495,633 3,947,044,709
EQUITY AND LIABILITIES
EQUITY:
Share capital 8 2,000,000,000 2,000,000,000
Own shares (138,044,363) (138,044,363)
Reserves and retained earnings 1,209,072,309 980,366,233
Profit/(Loss) for the period 157,634,267 98,055,074
TOTAL EQUITY 3,228,662,213 2,940,376,944
LIABILITIES:
NON-CURRENT LIABILITIES:
Loans 9 421,823,713 172,402,473
Total Non-Current Liabilities 421,823,713 172,402,473
CURRENT LIABILITIES:
Loans 9 107,312,826 415,698,715
Trade creditors and other non-current liabilities 10 286,696,881 418,566,577
Total Current Liabilities 394,009,707 834,265,292
TOTAL EQUITY AND LIABILITIES 4,044,495,633 3,947,044,709

The accompanying notes are part of these financial statements.

INCOME STATEMENTS BY NATURE

FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2006 AND 2005

(Amounts expressed in euro)

IFRS
Notes 3rd Quarter 2006 30.09.2006
Cumulative		 3rd Quarter 2005 30.09.2005
Cumulative
Operational income
Services rendered 320,494 1,007,576 429,030 1,117,895
Other operational income 12 39,094 75,120,293 300,970 1,333,118
Total operational income 359,588 76,127,869 730,000 2,451,013
Operational expenses
External supplies and services (502,644) (1,785,224) (1,135,469) (3,039,826)
Staff costs (1,232,958) (3,880,829) (1,375,530) (3,838,124)
Depreciation and amortisation (65,634) (195,662) (64,253) (190,935)
Other operational expenses (74,344) (465,727) (56,993) (297,125)
Total operational expenses (1,875,580) (6,327,442) (2,632,245) (7,366,010)
Operational profit/(loss) (1,515,992) 69,800,427 (1,902,245) (4,914,997)
Net financial expenses 2,984,960 5,733,830 (1,256,342) (1,398,343)
Investment income 13 22,804,804 82,100,011 2,270,275 29,315,033
Profit/(Loss) before taxation 24,273,772 157,634,268 (888,312) 23,001,693
Taxation (1) (1) - -
Profit/(Loss) for the period 24,273,771 157,634,267 (888,312) 23,001,693
Profit/(Loss) per share
Basic 14 0.0130 0.0845 (0.0005) 0.0123
Diluted 14 0.0130 0.0845 (0.0005) 0.0123

The accompanying notes are part of these financial statements.

SONAE, S.G.P.S., S.A.

STATEMENTS OF CHANGES IN EQUITY

FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2006 AND 2005

(Amounts expressed in euro)

No
tes		 Sh
are
Ca
ital
p		 Ow
n
Sh
are
s		 Re
d
ser
ves
an
Re
tain
ed
Ea
rnin
gs		 Ne
t
Pro
fit/(
Los
s)		 To
tal
Ba
lan
at 1
Ja
200
5
ce
as
nua
ry		 2,
000
000
000
,
,		 (
143
984
221
)
,
,		 1,
131
494
011
,
,		 12
,7
24,
783		 3,
000
234
,57
3
,
Ap
iati
of p
rofi
t of
20
05:
pro
pr
on
Tra
nsf
er t
o le
l re
ga
ser
ves		 - - 607
,57
9		 (
607
,57
9)		 -
Div
ide
nds
dis
trib
ute
d		 - - (
25,
772
446
)
,		 (
11,
543
993
)
,		 (
37,
316
439
)
,
nsf
Tra
eta
ine
d e
ing
er r
arn
s		 - - 573
221
,		 (
573
211
)
,		 -
Pu
rch
/(
Sa
le)
of o
sh
ase
wn
are
s		 - 5,
939
858
,		 - - 5,
939
858
,
Ch
in h
edg
nd
fair
lue
ang
es
e a
va
res
erv
es		 15 - - 399
987
207
,
,		 - 399
987
207
,
,
fit/(
s)
for
Pro
Los
the
nin
ont
hs
e m
end
ed
30
Se
ber
20
05
tem
p		 - - - 23
001
693
,
,		 23
001
693
,
,
Oth
ers		 - - - - -
Ba
lan
at 3
0 S
tem
ber
20
05
ce
as
ep		 2,
000
000
000
,
,		 (
138
044
363
)
,
,		 1,5
06,
889
,57
2		 23
001
693
,
,		 3,
391
846
892
,
,
Ba
lan
at 1
Ja
200
6
ce
as
nua
ry		 2,
000
000
000
,
,		 (
138
044
363
)
,
,		 980
366
233
,
,		 98
055
074
,
,		 2,
940
376
944
,
,
Ap
iati
of p
rofi
t of
20
05:
pro
pr
on
Tra
nsf
er t
o le
l re
ga
ser
ves		 - - 4,
902
,75
4		 (
4,
902
,75
4)		 -
Div
ide
nds
dis
trib
ute
d		 - - - (
46,
650
,5
96)		 (
46,
650
,5
96)
nsf
Tra
eta
ine
d e
ing
er r
arn
s		 - - - - -
Ch
in r
ang
es
ese
rve
s		 15 - - 223
803
322
,
,		 (
46,
501
,7
24)		 177
301
,5
98
,
Pro
fit/(
Los
s)
for
the
nin
ont
hs
e m
Se
end
ed
30
tem
ber
20
06
p		 - - - 157
634
267
,
,		 157
634
267
,
,
Oth
ers		 - - - - -
Ba
lan
at 3
0 S
ber
20
06
tem
ce
as
ep		 2,
000
000
000
,
,		 (
138
044
363
)
,
,		 1,
209
072
309
,
,		 157
634
267
,
,		 3,
228
662
213
,
,

The accompanying notes are part of these financial statements.

CASH FLOW STATEMENTS

FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2006 AND 2005

(Amounts expressed in euro)

OPERATING ACTIVITIES Notes 30.09.2006 30.09.2005
Net cash flow from operating activities (1) (6,672,639) (4,452,302)
INVESTMENT ACTIVITIES
Cash receipts arising from:
Investments
Tangible and intangible assets
Interest and similar income
Dividends
Loans granted		 359,161,894
1,631
20,146,756
53,613,493
242,544,898		 75,596,272
100
8,718,968
22,895,354
512,303,936
675,468,672 619,514,630
Cash Payments arising from:
Investments
Tangible and intangible assets
Loans granted		 (76,796,901)
(18,176)
(644,644,031)
(721,459,108)		 (340,915,676)
(14,331)
(244,060,108)
(584,990,115)
Net cash used in investment activities (2) (45,990,436) 34,524,515
FINANCING ACTIVITIES
Cash receipts arising from:
Loans obtained
Sale of own shares		 2,247,106,600
-
2,247,106,600		 2,736,180,499
1,586,339
2,737,766,838
Cash Payments arising from:
Loans obtained
Interest and similar charges
Dividends
Others		 (2,330,659,350)
(14,477,513)
(46,639,216)
-		 (2,676,373,804)
(14,856,281)
(37,307,385)
(39,666,666)
Net cash used in financing activities (3) (2,391,776,079)
(144,669,479)		 (2,768,204,136)
(30,437,298)
Net increase in cash and cash equivalents (4) = (1) + (2) + (3)
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period		 7 (197,332,554)
197,418,083
85,529		 (365,085)
415,418
50,333

The accompanying notes are part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2006

(Amounts expressed in euro)

1. INTRODUCTION

SONAE, SGPS, SA ("the Company" or "Sonae"), whose head-office is at Lugar do Espido, Via Norte, Apartado 1011, 4470- 909 Maia, Portugal.

2. BASIS OF PREPARATION

Interim financial statements are presented quarterly, in accordance with IAS 34 – "Interim Financial Reporting".

3. PRINCIPAL ACCOUNTING POLICIES

The accounting policies adopted are consistent with those followed in the preparation of annual financial statements for the year ended 31 December 2005.

4. INVESTMENTS

As at 30 September 2006 and 31 December 2005 the Company held investments in the following affiliated and associated undertakings:

30.September.2006 31.December.2005
Companies % Held Fair Value Book Fair Value % Held Fair Value Book Fair Value
Value Reserve Value Reserve
Modelo Continente, SGPS, SA 79.43% 1,791,188,527 1,533,288,663 257,899,864 75.64% 1,647,342,970 1,456,491,762 190,851,208
Sonae Sierra SGPS, SA 50.00% 689,442,815 490,113,339 199,329,476 50.00% 632,455,428 490,113,339 142,342,089
Sonaecom, SGPS, SA 13.27% 207,836,629 280,146,314 (72,309,685) 13.27% 144,068,574 280,146,314 (136,077,740)
Sonae Industria, SGPS, SA - - - - 0.71% 6,400,000 5,002,410 1,397,590
Others - 396,792,412 396,792,412 - - 572,214,973 568,817,462 3,397,511
Total 3,085,260,383 2,700,340,728 384,919,655 3,002,481,945 2,800,571,287 201,910,658

5. OTHER NON-CURRENT ASSETS

As at 30 September 2006 and 31 December 2005 other non-current assets are detailed as follows:

30.September.2006 31.December.2005
Loans granted to group companies 883,362,540 499,360,204
Guarantee deposits 9,456 13,529
Other 141,603 243,891
883,513,599 499,617,624

6. TRADE ACCOUNT RECEIVABLES AND OTHER CURRENT ASSETS

As at 30 September 2006 and 31 December 2005 trade account receivables and other current assets are detailed as follows:

30.September.2006 31.December.2005
Trade account receivables 289,593 1,207,534
Group companies 27,961,408 12,528,006
Taxes and contributions receivables 1,131,206 490,177
Debtors - sale of investments 37,602,288 226,362,317
Accrued income and prepayments 7,913,046 286,466
Others 576,441 583,053
75,473,982 241,457,553

7. CASH AND CASH EQUIVALENTS

As at 30 September 2006 and 31 December 2005 cash and cash equivalents can be detailed as follows:

30.September.2006 31.December.2005
Cash at hand 2,500 2,500
Bank deposits 83,806 197,439,106
Cash and cash equivalents on the balance sheet 86,306 197,441,606
Bank overdrafts 777 23,523
Cash and cash equivalents on the cash flow statement 85,529 197,418,083

8. SHARE CAPITAL

As at 30 September 2006 and 31 December 2005 share capital consisted of 2,000,000,000 ordinary shares of 1 euro each.

9. LOANS

As at 30 September 2006 and 31 December 2005 this caption included the following loans:

30.September.2006 31.December.2005
Nominal value of bonds 424,819,685 174,819,685
Up-front fees not yet charged to income statement (2,995,972) (2,417,212)
Bonds 421,823,713 172,402,473
Non-current loans 421,823,713 172,402,473
Commercial paper 32,500,000 340,950,000
Nominal value of Sonae/97 bonds 74,819,685 74,819,685
Up-front fees not yet charged to income statement (7,636) (94,493)
Bank overdrafts 777 23,523
Current loans 107,312,826 415,698,715

Bonds SONAE / 97 amounting to 149,639,369 euro repayable, at par value, in two equal instalments on the 18th and 20th coupons. Interest rate equal to Lisbor (subsequently changed to Euribor) plus 0.17% from the 1st to the 13th coupon, plus 1.17% in the 14th coupon and plus 1.22% from the 15th to the 20th coupons. Half of this loan (74,819,685 euro) was reimbursed at par value in October 2006.

Bonds SONAE / 05 amounting to 100,000,000 euro, repayable after 8 years, in one instalment, on 31 March 2013. Interest rate equal to Euribor 6 months plus 0.875%, with interest paid half-yearly.

Bonds Sonae 2006/2011 amounting to 250,000,000 euro, repayable after 5 years, in one instalment, on 10 May 2011. Interest rate equal to Euribor 6 months plus 0.65%, with interest paid half-yearly.The company has the option to make whole or partial reimbursements, at no extra cost, on the date of the 6th and 8th coupons.

10. OTHER CURRENT LIABILITIES

As at 30 September 2006 and 31 December 2005, other current liabilities were made up as follows:

30.September.2006 31.December.2005
Trade creditors 165,869 386,703
Group companies 273,270,000 298,372,750
Taxes and contributions payable 121,061 901,462
Accrued expenses 13,094,170 8,655,582
Others 45,781 110,250,080
286,696,881 418,566,577

11. CONTINGENT ASSETS AND LIABILITIES

30.September.2006 31.December.2005
Guarantees given:
on tax claims 1,776,135 1,776,135
on judicial claims 355,199 355,199
Others 44,580,000 192,323,306

12. OTHER OPERATIONAL INCOME

This caption includes 74,999,997 euro corresponding to the gain on sale to an affiliated undertaking of a group of brands.

13. INVESTMENT INCOME

As at 30 September 2006 and 30 September 2005, investment income can be detailed as follows:

2006 2005
3rd Quarter Cumulative 3rd Quarter Cumulative
Dividends received - 53,613,493 - 8,718,968
Profit/(Loss) on sale of investments 22,804,804 28,486,518 2,270,275 20,596,065
22,804,804 82,100,011 2,270,275 29,315,033

14. EARNINGS PER SHARE

Earnings per share for the period were calculated taking into consideration the following amounts:

2006 2005
3rd Quarter Cumulative 3rd Quarter Cumulative
Net profit
Net profit taken into consideration to calculate basic earnings per
share (Net profit for the period)		 24,273,771 157,634,267 (888,312) 23,001,693
Effect of dilutive potential shares - - - -
Interest related to convertible bonds (net of tax) - - - -
Net profit taken into consideration to calculate
diluted earnings per share:		 24,273,771 157,634,267 -888,312 23,001,693
Number of shares
Weighted average number of shares used to calculated basic
earnings		 1,866,581,428 1,866,178,736 1,866,023,854 1,865,928,829
Effect of dilutive potential ordinary shares from convertible bonds - - - -
Weighted average number of shares used to calculated diluted
earnings per share		 1,866,581,428 1,866,178,736 1,866,023,854 1,865,928,829
Profit/(Loss) per share (basic and diluted) 0.0130 0.0845 -0.0005 0.0123

15. CHANGES IN RESERVES

Details of changes in reserves in the nine months ended on 30 September 2006 and 30 September 2005 may be summarised as follows:

30.September.2006 30.September.2005
Fair value reserve 177,301,598 404,059,118
Sale of own shares - (4,353,519)
Hedging reserve - 281,608
Free reserves 46,501,724 -
223,803,322 399,987,207

16. SUBSEQUENT EVENTS

On 16 October 2006, following the registration with the Commercial Registration Office of the acquisition of all of the shares in Modelo Continente, SGPS, SA, Sonae became, together with a wholly-owned subsidiary, the holder of 100% of the share capital of Modelo Continente, SGPS, SA.

On 18 October 2006 the notary deed was signed for the share capital increase of Sonaecom, SGPS, SA from 296,526,868 euro to 366,246,868 euro, through the issuance of 69,720,000 new shares, each with a nominal value of 1 euro and with a corresponding total share premium of 275,657,217 euro, subscribed by 093X - Telecomunicações Celulares, SA and Parpública - Participações Públicas, SGPS, SA by means of contribution of their respective shareholders, including supplementary capital, in Optimus - Telecomunicações, SA.

17. APPROVAL OF THE FINANCIAL STATEMENTS

The accompanying financial statements were approved by the Board of Directors and authorized for issue on 9 November 2006.

18. INFORMATION REQUIRED BY LAW

Decree-Law nr 318/94 art 5 nr 4

In the nine months ended 30 September 2006 shareholders' loan contracts were entered into with the following companies:

Sonae Investments, BV

In the nine months ended 30 September 2006 short-term loan contracts were entered into with the following companies:

Agloma Investimentos, SGPS, SA Gestholding, SGPS, SA Imoareia, Investimentos Turísticos, SGPS, SA Modelo Continente, SGPS, SA Público Comunicação Social, SA SC - Sociedade de Consultadoria, SA Sete e Meio - Investimento e Consultadoria, SA Sonae Capital, SGPS, SA Sonae Sierra, SGPS, SA Sonae Turismo, SGPS, SA

As at 30 September 2006 the amounts owed by affiliated undertakings can be summarized as follows:

Loans granted

Companies Closing Balance
Agloma Investimentos, SGPS, SA 932,500
Choice Car, SGPS, SA 250,000
Investalentejo, SGPS, SA 4,283,500
SC - Sociedade de Consultadoria, SA 385,158
Sonae Capital, SGPS, SA 21,843,640
Sonae Investments, BV 882,574,540
910,269,338

As at 30 September 2006 the amounts owed to affiliated undertakings can be summarized as follows:

Loans obtained

Companies Closing Balance
Atlantic Ferries, SA 885,000
Modelo Continente, SGPS, SA 219,485,000
Sonaecom, SGPS, SA 52,900,000
273,270,000

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